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Message
Escrow shortage
Posted on 3/21/23 at 7:49 am
Posted on 3/21/23 at 7:49 am
Just got a letter from Wells Fargo regarding an escrow shortage in my account. Insurance and taxes are included in my mortgage payment so how does this happen? Have my property taxes been recalculated? The letter says it’s a prediction of what the shortage might be this year. Someone explain this to me like I’m a 5 year old. FYI my insurance payment is the same.
13
Posted on 3/21/23 at 7:56 am to In The Know
Property taxes probably went up. They are going to want to make up the difference plus increase to match the new amount.
Posted on 3/21/23 at 8:01 am to In The Know
If your assessed home value increased your mortgage payments may increase but it wouldn't be by much.
Either your property taxes, homeowners premiums, flood insurance premium (if applicable) has most likely changed in the past year.
Either your property taxes, homeowners premiums, flood insurance premium (if applicable) has most likely changed in the past year.
Posted on 3/21/23 at 8:17 am to In The Know
My insurance and taxes both went up last year so my mortgage payment went up.
Posted on 3/21/23 at 8:20 am to In The Know
5 YO explanation
Original numbers
Annual property taxes = $2,400
Annual Hazard Insurance = $1,200
Total = $3,600/12months = $300/month into your escrow account, from your Principal+interest+Property Taxes+Insurance (PITI) payment.
They require a 2 month minimum reserve in your escrow account (in this example $600 = 300x2).
New annual numbers:
Property taxes $3,000
Hazard insurance $1,800
Total = $4,800/12 = $400/month.
Your PITI payment just went up $100/month. Your principal and interest amount remains fixed (assuming fixed rate mortgage). It’s the escrow/taxes/insurance which changes.
As life continues, things will continue to get more expensive… insurance, taxes etc. - if you believe this to be true - you should expect the escrow side of your loan to continue rise with each annual adjustment. Could be as little as $6/mo, or more.
Original numbers
Annual property taxes = $2,400
Annual Hazard Insurance = $1,200
Total = $3,600/12months = $300/month into your escrow account, from your Principal+interest+Property Taxes+Insurance (PITI) payment.
They require a 2 month minimum reserve in your escrow account (in this example $600 = 300x2).
New annual numbers:
Property taxes $3,000
Hazard insurance $1,800
Total = $4,800/12 = $400/month.
Your PITI payment just went up $100/month. Your principal and interest amount remains fixed (assuming fixed rate mortgage). It’s the escrow/taxes/insurance which changes.
As life continues, things will continue to get more expensive… insurance, taxes etc. - if you believe this to be true - you should expect the escrow side of your loan to continue rise with each annual adjustment. Could be as little as $6/mo, or more.
Posted on 3/21/23 at 8:42 am to In The Know
Have my property taxes been recalculated?
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You could alway call for an explanation if needed.
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You could alway call for an explanation if needed.
Posted on 3/21/23 at 8:46 am to In The Know
I just got one for a surcharge 
My mortgage is going down $30 a month.. and I got a check from them a few months ago for $600
My mortgage is going down $30 a month.. and I got a check from them a few months ago for $600
Posted on 3/21/23 at 9:13 am to Fbohn1
quote:
Annual property taxes = $2,400
Annual Hazard Insurance = $1,200
I wish these were my numbers.
Posted on 3/21/23 at 11:16 am to MSTiger33
quote:
Annual property taxes = $2,400
Annual Hazard Insurance = $1,200
I wish these were my numbers.
Yea no shite.
Posted on 3/21/23 at 12:10 pm to VermilionTiger
Got a check from mine a few years ago, told them to put it back toward my escrow instead
Posted on 3/21/23 at 2:19 pm to In The Know
theres been a shortage every year since 2020 on my escrow. 2018 and 2019 had a surplus
2021 and 2022 were due to insurance, 2020 was property tax
2021 and 2022 were due to insurance, 2020 was property tax
This post was edited on 3/21/23 at 2:20 pm
Posted on 3/21/23 at 2:51 pm to In The Know
Get that letter every year. Looks like someone needs more money. Shocker! Its best you pay that shortage if not Wells will take care of that for you.
Posted on 3/21/23 at 2:55 pm to In The Know
quote:You can figure that out by either going to your parish assessor's website. Should be public record, so just search by your name and/or address to see if there was a change from 2021 to 2022 taxes. Or you could login to your mortgage account online and look at the payments made from escrow over the last 2 years and see if there was a difference.
Have my property taxes been recalculated?
quote:
Someone explain this to me like I’m a 5 year old.
Escrow will take the combined annual totals of your property tax, homeowners insurance, flood insurance (if required), and PMI (if applicable)...divide that by 12 and that should be your monthly escrow payment. Escrow is paid in advance, so when you closed on your house the first year of taxes and insurance were paid up front as part of closing. The escrow payments throughout the next year were to build up your escrow to have the money when insurance and tax bills came due the following year.
If the sum of your taxes and insurance annual costs went up year over year, your escrow is going to have a shortage. The lender will still pay the bill even if you're short, but they're going to increase your payment to offset what they now expect your insurance/taxes to run going forward plus the shortage for the current year.
Example: Your combined total for insurance and taxes was $3600 last year so your escrow payment would be $300 a month. Insurance and/or taxes increased to a total of $4800 this year. So now your mortgage company will adjust to escrow for $400/month going forward since they'd expect the grand total for next year to be about the same. But you still have a $1200 shortage to account for this year. Usually the mortgage company will give you the option to either pay the $1200 shortage in a lump sum or they would adjust your payment by another $100/month for the next year to recoup the $1200 shortage. If you payoff the shortage in a lump sum, your new escrow payment is $400/month. If you don't pay off the $1200 shortage, your new payment is $500/month for the next year and then assuming insurance/taxes stays the same next year, your escrow would drop back to $400 since you made up the $1200 shortage
Posted on 3/21/23 at 3:43 pm to In The Know
Posted on 3/21/23 at 6:16 pm to In The Know
quote:get your check book ready. And some Vasoline
Escrow shortage
Posted on 3/21/23 at 6:23 pm to In The Know
The total of the 12 payments was divided at let’s say $6,000 for 500 per month. Either your taxes and/or insurance went up so the numerator (sorry, big word) is now more. Let’s say, it’s now $6,600 - you need to be paying $550 per month to make that whole. Since you’ve been paying the 500 for a while there’s a good chance you need to make up some months. Make sense?
Posted on 3/21/23 at 7:54 pm to MSTiger33
Oh me too haha. Was just using easily divisible numbers off the top of my head.
My primary residence is over $1K monthly, and some rental property we have is nearly $2,500 monthly.
TX property taxes, windstorm, and Flood…
My primary residence is over $1K monthly, and some rental property we have is nearly $2,500 monthly.
TX property taxes, windstorm, and Flood…
This post was edited on 3/21/23 at 7:55 pm
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