re: Escrow question

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Not sure. I’ve always either paid cash for a home or put at least 20% down so I don’t have to escrow.

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Wrong. You’re thinking of PMI. Escrow is optional unless you’re in a flood zone. Most lenders will make you escrow flood insurance.

Now back to escrow. It’s optional and you don’t have to have it. It requires a cushion to be maintained and also your fees at closing are a lot more. However, I don’t want to shell out $7k for taxes and insurance when I get those annual bills so it’s worth it for me to have the bank pay it.
If your taxes and/or insurance goes up, you’ll have to increase the cushion, increase the current escrow balance to pay the bill, and also increase the payments going forward to be able to pay next year’s bill.
Escrow analysis is ran annually and if your insurance comes back down, or if you shop and find cheaper insurance, you’ll get a refund.

frick their cushion. I just started an escrow in a money market account. At least I’m getting some interest on my money. They don’t do a very good job estimating the escrow in my opinion. My escrow is damn near close to the price of my mortgage.

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I just started an escrow in a money market account.

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I just paid my shite off once the interest payments were too small to write off anymore.

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In the 13 years I was in my other house the percentage increase is probably already higher on this house in less than 2 years..

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Have you seen how the world has been operating the last two years? If taxes and insurance come down (unlikely) then your escrow will come down. It is more likely that they remain somewhat stable and it won’t go up or if it does, not nearly at that level.

It amazes me how people don’t understand the basic financial life functions. No offense because there are many people in your same situation.

If both your homeowners insurance and property tax went up $500 each, that created a $1000 shortage in your escrow…or about $83 a month.

You’re short $1000 this year and your lender increases the escrow by $83 a month expecting to pay the same tax and insurance rate next year. But they still need to make up the $1000 shortage for this year, so they double that $83 up to account for higher expected tax/insurance next year and to recoup the shortage from this year

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It makes no sense to me since property values are down

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Your property value is down? Where do you live?

You realize the escrow is for your insurance and taxes? One of those is going up. Probably your insurance

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I guess this is my biggest concern, being that it's not a one time thing. In the nearly two years I've been in this house it's gone up $300 a month. I can swallow that but if that rate continues for next few years that's not going to be good.

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You can also try to shop homeowners insurance as well. If you find a cheaper provider let your mortgage lender k ow and they will change payee and re calculate your escrow.

Your mortgage company should be able to tell you if it's Insurance or Tax that changed.

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Escrow covers you insurance and ur property taxes and PMI. But after 15 years there should be no PMI.

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I understand. Read the thread. I do not have PMI. My insurance and taxes both went up about 500 dollars which would be around an understandable/reasonable raise of about 80 a month. Mine went up 250 a month.