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Message
Is it possible for your escrow payments to skyrocket after refinance?
Posted on 1/19/15 at 10:35 am
Posted on 1/19/15 at 10:35 am
Here's a post I made a few weeks ago:
LINK /
Background tl;dr
Moved out of house and rented it to tenants. Escrow payments were fine until I got a notice in December saying in March, I would be responsible for paying a $910 shortage.
Update
I had a bad experience with my insurance agent and switched offices. My new agent had a hard time figuring out why there would be a $910 shortage and thought I should call my lender (Chase). He assumed that losing the homestead exemption, the raise in insurance premiums for being a rental, and the potential rise in property taxes were potentially responsible for the shortage. NOTE - According to his calculations, he assumed my monthly payment should only have gone up $50, which it did. But I also owe $910 on top of the $600 increase according to his calculations.
After speaking to Chase's tax specialist, he said there was nothing on record about a rise in taxes. I actually was not receiving a homestead exemption (much to my dismay) and my property taxes are the same as last year.
Unfortunately, their insurance specialist office is off for MLK day, but the tax guy said that they wouldn't know any more than my agent, who said he couldn't figure out why I was $910 short. But maybe (probably) they're smarter than he is and can pinpoint where the shortage is.
After doing some more reading about this issue online, I think I may have identified the cause, but I'm not sure if it's correct. Maybe you all can help me:
I purchased the house in 2009 for $179k. I refinanced in June of 2013 for $170k, lowering my payments from about $900/month (without PMI, insurance, and taxes) to about $750/month (again without the extra add-ons).
By refinancing, my escrow payments would have been assessed for the previous year of June 2012-May 2013. From June 2013-May 2014, my payments would have reflected the previous year's amounts.
From May 2014-June 2015, I would still be paying the old price until the new analysis came through.
However, if the new analysis reflected a higher price, not only would my escrow payments increase to satisfy the new price, they would also need to catch up to the short payments from June 2013-2015.
Is that an accurate analysis? Is this actually a possible explanation? Or is this completely off?
LINK /
Background tl;dr
Moved out of house and rented it to tenants. Escrow payments were fine until I got a notice in December saying in March, I would be responsible for paying a $910 shortage.
Update
I had a bad experience with my insurance agent and switched offices. My new agent had a hard time figuring out why there would be a $910 shortage and thought I should call my lender (Chase). He assumed that losing the homestead exemption, the raise in insurance premiums for being a rental, and the potential rise in property taxes were potentially responsible for the shortage. NOTE - According to his calculations, he assumed my monthly payment should only have gone up $50, which it did. But I also owe $910 on top of the $600 increase according to his calculations.
After speaking to Chase's tax specialist, he said there was nothing on record about a rise in taxes. I actually was not receiving a homestead exemption (much to my dismay) and my property taxes are the same as last year.
Unfortunately, their insurance specialist office is off for MLK day, but the tax guy said that they wouldn't know any more than my agent, who said he couldn't figure out why I was $910 short. But maybe (probably) they're smarter than he is and can pinpoint where the shortage is.
After doing some more reading about this issue online, I think I may have identified the cause, but I'm not sure if it's correct. Maybe you all can help me:
I purchased the house in 2009 for $179k. I refinanced in June of 2013 for $170k, lowering my payments from about $900/month (without PMI, insurance, and taxes) to about $750/month (again without the extra add-ons).
By refinancing, my escrow payments would have been assessed for the previous year of June 2012-May 2013. From June 2013-May 2014, my payments would have reflected the previous year's amounts.
From May 2014-June 2015, I would still be paying the old price until the new analysis came through.
However, if the new analysis reflected a higher price, not only would my escrow payments increase to satisfy the new price, they would also need to catch up to the short payments from June 2013-2015.
Is that an accurate analysis? Is this actually a possible explanation? Or is this completely off?
This post was edited on 1/19/15 at 10:37 am
Posted on 1/19/15 at 12:07 pm to StringedInstruments
You are correct that an annual escrow analysis would have identified the problem. Have you reviewed the analysis? You may be able to get a copy by logging into your mortgage account on chase online.
Did you refinance with the same bank?
What happened to the escrow balance under the old mortgage? Were they simply transferred to the new loan? Were they refunded? Were they used against any closing costs? Did you have to establish a new escrow at the closing of the refinance?
Either the starting amount of the escrow is too low, or, the contributions to escrow went down, or the expenses paid out of escrow went up. It's got to be one of the three or a combo of those.
Reviewing your HUD-1 from the refinance closing and all subsequent escrow analysis statements should help.
Did you refinance with the same bank?
What happened to the escrow balance under the old mortgage? Were they simply transferred to the new loan? Were they refunded? Were they used against any closing costs? Did you have to establish a new escrow at the closing of the refinance?
Either the starting amount of the escrow is too low, or, the contributions to escrow went down, or the expenses paid out of escrow went up. It's got to be one of the three or a combo of those.
Reviewing your HUD-1 from the refinance closing and all subsequent escrow analysis statements should help.
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