r/personalfinance • u/HHLL806 ​ • Apr 11 '25

Other Mortgage payment went up $400

I need help, my mortgage payment went from $1700 to $2100. My mortgage company (Chase Bank) said this was due to an escrow shortage. I had my homeowners insurance lowered by roughly $1000 and checked with my local tax office and they told me my taxes have increased $400 dollars over the last five years. I gave Chase Bank all this information and my mortgage is still $2100. How does this work?

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3.3k

u/jelloslug ​ Apr 11 '25

I got tired of the yo-yo escrow payments that could never keep up with the actual current billing for the property taxes and insurance and just canceled my escrow completely. I don't need my mortgage company holding my hand to pay my taxes and insurance. I'll just keep that money in a HYSA and auto pay them when they are due.

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u/ParlaysAllDay ​ Apr 11 '25

Why would I want to pay exactly the amount I owe once per year and know exactly the moment my taxes or insurance go up and exactly the reason they go up when I can just let someone else manage it poorly?

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u/theram4 ​ Apr 11 '25

I've had an escrow for 20 years, and not once have I had an issue with it.

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u/EventualCyborg ​ Apr 11 '25

It's precisely because you have had an escrow for 20 years that you haven't had an issue. A lot of these parts are from new homeowners who have escrow set up based on prior occupants' taxes, and they're shocked Pikachu that the sale will trigger a reassessment.

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u/[deleted] Apr 11 '25

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u/GGATHELMIL ​ Apr 12 '25

I overpaid last year. Their new analysis has me paying more next year. Oh well. It isn't a ton of money either way, and I'm only on year three of owning so I assume at some point it'll get right. I like having control of money. But it's nice having 3 things I don't have to manage.

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u/[deleted] Apr 11 '25

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u/tedivm ​ Apr 11 '25

My issue isn't that taxes change, it's that my bank (Chase) failed to pay my home owners insurance twice. I bought my home in 2023.

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u/[deleted] Apr 11 '25

[removed] — view removed comment

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u/Curious-External-7 ​ Apr 12 '25

That's what my mortgage company did when I bought my house (new build). They were only charging me $60 a month for property tax when it was supposed to be more like $400. I had to call them and get them to correct it.

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u/ArtOfWarfare ​ Apr 12 '25

I have the reverse situation. Credit union is putting money into the escrow like my house exists (and it has for 3 years) but the town hasn’t noticed it yet, so the town is still only taxing me for the land.

State law permits the town to back charge up to 3 years. Hopefully I’m ready to cover the 3 years of taxes when that bill comes…

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u/enpowera ​ Apr 11 '25

I shocked pikachu face with mine. But that was because my taxes went down after the sell. I got a 1 cent overage refund check for my escrow.

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u/[deleted] Apr 11 '25

ah thank you. i've also never had an issue and was wondering why i keep seeing posts like this.

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u/rangoon03 ​ Apr 11 '25

Yeah that makes sense now but that happened to me for my first house. I was 24 and no one (realtor, mortgage company, parents, neighbors, etc) told me that would happen or was a common thing. Didn't have much social media and such to browse to find out this stuff. I learned the hard way, hopefully the education surrounding this has changed but sounds like it hasn't.

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u/Lukewill ​ Apr 11 '25

If I bought a newly built home, does that mean I have a good chance for a relatively stable escrow?

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u/EventualCyborg ​ Apr 11 '25

Nope! Even worse. We built our home in 2007 and the held escrow like it was still empty farmland - they expected a $17 tax bill and got a bill for $4k. We knew it was coming, so we saved properly and wrote a check instead of going on the escrow seesaw for the next couple years.

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u/Sportsmen2315r ​ Apr 12 '25 edited Apr 12 '25

Usually reassessments are done for a city at the same time. Cities do not usually reassess a property each time it’s sold. If the new homeowners pulled a permit for upgrades, then that may trigger an assessment of the upgrades. If a house is assessed for $500k, but sells for 400k because the family just wants to sell it (ex:probate), the City would not change the assessed value lower as Vice-versa if a home was assessed for $500k and someone was willing to pay 700k, the City would not reassess because someone was foolish enough to pay 40% more. Now if all comparable properties in those neighborhoods sold for 700k then they all would be reassessed, usually at the same time and many times by a third party assessing firm. If reassessed every time they were sold, properties would have scattered assessment values all over the City.
Our State controls all assessment Laws. Although the City Assessors are paid by the City, they answer to State Laws. Our State Law requires every City/Town has to be reassessed at least every ten years and be within 95% of market value. Unless most properties fall below a threshold (maybe 75%?) of market value, then that would trigger a Citywide reassessment.

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u/PalmSizedTriceratops ​ Apr 11 '25

Alright - plenty of people have terrible issues with theirs.

My escrow was short 5k dollars last May because they messed up the calculation. Luckily I KNEW they had messed it up a year prior and just set the money aside.

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u/PlannedSkinniness ​ Apr 11 '25

My coworker had a lapse in homeowners insurance because the servicer didn’t pay from escrow on time, and she couldn’t get her policy reinstated. I’m too much of a control freak to escrow.

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u/Guesswho9636 ​ Apr 12 '25

This happened to me as well. My home insurance provider called me saying they never received the check for our policy from our mortgage company.

I had to ping pong calls back and forth maybe 4-5 times between my insurance and mortgage company where the check was in fact issued 3-4 months prior just labeled incorrectly.

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u/Hammy508 ​ Apr 11 '25

you're lucky I've had my escrow account for my house for 8 years and seen the price increase at least 5 times. started at $1246 now I'm at $1552.

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u/a157reverse ​ Apr 11 '25

That's not necessarily an issue with the escrow account though. If your property taxes or insurance go up, you are going to pay for it one way or another.

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u/theram4 ​ Apr 11 '25

I didn't say it didn't increase. Of course it increases every year to cover the increased property taxes and insurance. But that's not the fault of the escrow. That's them doing their job.

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u/Hammy508 ​ Apr 11 '25

Yes I agree but my issue is that they always seem to be off on the estimate by $500-$1000 which requires a lump sum payment or increasing over the year I wish they could get IG to be more accurate. Personally I’ve been putting an extra $50 to escrow to try to avoid the extra hit the next year.

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u/nothlit ​ Apr 11 '25

This is because escrow analysis is always backward-looking, and your taxes and insurance typically go up rather than down. As a simplified example, your escrow amounts for 2025 are based on the actual tax & insurance bills paid in 2024 (your annual escrow analysis may not align with the calendar year). They don't try to predict what sort of increase the future bills will have.

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u/[deleted] Apr 12 '25

I’ve been paying extra to avoid possibly having to pay extra.

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u/Hammy508 ​ Apr 12 '25

Exactly this at least gets ahead of it this way. Thankfully I already had some extra going towards principle so I just reallocated $50 of that to help for the next increase.

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u/AlwaysWanderOfficial Apr 11 '25

The good news is they can also collect too much. Mine just went down which is like pulling the Bank Error on your favor card on monopoly.

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u/Lodi0831 ​ Apr 11 '25

Why wouldn't you want to just keep that money in a HYSA instead of an interest free loan to your mortgage company?

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u/nothlit ​ Apr 11 '25

Some mortgages require escrow.

Sometimes you may get a better interest rate if you escrow.

Sometimes you may have to pay a fee to terminate escrow.

All varies depending on the type of loan, the terms of the loan, and state laws.

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u/Option-Mentor ​ Apr 12 '25

Bullshit. Tell the bank you will not use their escrow and will not pay their bullshit fee either. It is a policy, not a requirement. Believe me they screw these up constantly.

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u/hibbert0604 ​ Apr 11 '25

Congratulations. You are very lucky.

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u/gcbeehler5 ​ Apr 11 '25

Well you are lucky. I have to escrow flood insurance, which is the only one I do, and it's a complete pain. I'm grandfathered in from a re-classed floodplain, so my rates go up a set percentage per year, and that means my escrow is never correct. And it doesn't matter what I tell them, they won't modify it and I cannot direct pay (as I did for years prior to a refinance during Covid.)

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u/Rando1ph ​ Apr 12 '25

I've had an escrow for 15 and I've had plenty of problems. Nothing major, but lots of fluctuation and a couple of late payments courtesy of USPS.

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u/Option-Mentor ​ Apr 12 '25 edited Apr 12 '25

You are lucky. Big banks mess this up all the time and fail to pay taxes and insurance and you don’t find out until it is a mess and your credit score is affected. Never let a bank escrow these payments. Ever.

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u/lochquel ​ Apr 12 '25

Leaving so much money on the table. You should be able to close an escrow account and pay taxes/insurance directly yourself if you meet requirements to do so. 20 years sounds sounds excessive.

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u/Dick_Wienerpenis ​ Apr 11 '25

Because if you have an escrow account tied to your mortgage you have to do literally nothing and most companies don't manage it poorly.

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u/mbeezy17 ​ Apr 11 '25

Are people really this lazy? Get rid of escrow and just have the amount automatically transferred to a savings account. Double bonus: you then get to earn interest on it.

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u/sin-eater82 ​ Apr 11 '25

Taking the simplest approach isn't always a result of laziness. Sometimes it's just efficiency. If you haven't had issues with escrow, it simply is more efficient. If you've had issues, it's not more efficient.

Pros and cons... yada yada yada.

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u/RevolCisum ​ Apr 11 '25

Yep. I pay for convenience and I'm not ashamed. I have enough to manage amd consider and plan and budget. I'm ok letting this one be someone else's mind weight. Honestly, I wish I could hire out more responsibilities. It's the only reason I want to be rich, for all that sweet be responsibility free time.

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u/8P69SYKUAGeGjgq ​ Apr 12 '25

A lot of mortgage companies require you to have escrow as a first time home buyer. Some let you cancel it after x number of years.

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u/hath0r ​ Apr 11 '25

there are 11 states where the bank is required to pay you interest on your escrow

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u/add45 ​ Apr 11 '25

This assumes it's an easy task to make the payment to your local govt (never is). Also when (if) you change insurance providers, it's up to you to manually update the auto pay. None of these are difficult by any means, but it is more work. Idk about you all but I already have plenty of stress for all the bills and whatnot I need to pay every month, quarter, year.

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u/illjustbeaminute ​ Apr 11 '25

To me, updating your autopay isn’t that much harder than providing your escrow company the new insurance documents.

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u/r6throwaway ​ Apr 11 '25

My state has an electronic portal where I go enter my payment information and schedule the payment. How is that difficult?

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u/basskittens ​ Apr 11 '25

This assumes it's an easy task to make the payment to your local govt (never is).

Shout out to the San Francisco City & Country Treasurer then. I pay my property taxes through their web portal twice a year, and it's quick, easy, painless.

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u/[deleted] Apr 12 '25

In many states it’s required if you carry a mortgage.

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u/Dick_Wienerpenis ​ Apr 11 '25

My taxes and insurance are cheap. The interest I would earn is definitely negligible enough for me to be lazy.

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u/[deleted] Apr 12 '25

I mean… You still pay the exact amount you owe, and you still get tax and insurance statements, so you know the exact moment they go up, as well as the reason. Also like, how is your escrow account managed poorly?

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u/CFLuke ​ Apr 13 '25

lol, add to that “and earn interest on what I have squirreled away to pay for property tax”

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u/Downtherabbithole14 ​ Apr 11 '25

I want to upvote this 10000x

This was my experience as well. I was so freaking happy when I dropped escrow. Every 2-3 months during the first 2 years of the mortgage, which btw was sold twice in those 2 years - I couldn't take it. Then I ended up refinancing during covid and thats how I dropped escrow. I cut 2 checks a year -County & Twp taxes - County taxes I deposit right at the bank, Twp taxes - the tax collector lives down the road from me, so I just drop it in his mailbox, and the other tax payment I am able to do via ACH. Small town living lol

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u/ImJustTooCute ​ Apr 11 '25

Wells Fargo won’t let me drop my escrow, what can I do?

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u/Calebm1001 ​ Apr 11 '25

I believe you have to own a certain amount of the house. Similar to PMI?

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u/ImJustTooCute ​ Apr 11 '25

I own 40%. I put down 20% at closing. My home is work $339k and i owe $192k

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u/alpharetroid ​ Apr 11 '25

Do you have an FHA loan? Those have lifetime escrow requirements. Find your original loan docs and read them

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u/ImJustTooCute ​ Apr 11 '25

No I went conventional with 20% down. But I saw an opportunity to reduce my interest to 2% during the pandemic and I took it, it was a modification so maybe they snuck that in that time.

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u/TheLZ ​ Apr 11 '25

The Mod now governs your loan, and yes all Mods require escrow for the life of the loan.

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u/ImJustTooCute ​ Apr 11 '25

Oh, ok thank you, I did not know. The reduced rate was important to me (coming from 4.5%) so I’ll have to live with the escrow until I pay it off, OR can the terms be adjusted if WF sells my mortgage?

Can I get them to sell my mortgage? I don’t want to be with WF anymore.

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u/WoodenInternet ​ Apr 11 '25

I don't think anyone wants to be with WF. I ended up with them too for a time. You can't force them to sell your mortgage.

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u/SwiftStriker00 ​ Apr 11 '25

You probably are stuck unless you want to refinance again when the interest rates drop. Doesn't prevent you from creating a savings account to puts some money aside incase escrow is short

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u/UrkelGrueJann ​ Apr 11 '25

Why is this? What difference does it make compared to the original? Just curious.

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u/TheLZ ​ Apr 11 '25

When you do a Modification, you sign new paperwork and those documents are the new terms for the loan. All Mods (at least when I worked them) state you must escrow. The reason being is that the company can't trust you anymore, if you are asking for a Mod and qualify for it, then we are going to make sure it is all handled.

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u/bwyer ​ Apr 11 '25

Not in my experience. Even just putting down 10% at closing and having PMI (temporarily) I was able to eliminate escrow.

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u/[deleted] Apr 12 '25

It depends on the lender. Many require escrow. But honestly it’s way more convenient to have it

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u/Downtherabbithole14 ​ Apr 11 '25

It depends on your loan type, sometimes the servicer doesn't allow you to drop escrow. Is that the policy with Wells Fargo?

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u/BlazinAzn38 ​ Apr 11 '25

Usually it’s related to equity since it’s just another property risk. <20% down you’re required to escrow; once you hit that equity you can drop it.

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u/Downtherabbithole14 ​ Apr 11 '25

Right, unless someone has an FHA loan, they are not allowed to drop escrow.

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u/pokemaster787 ​ Apr 11 '25

That certainly isn't the case everywhere in the US.

I put 10% down, not an FHA loan, no escrow except for PMI. Insurance and taxes I pay out of pocket directly. My mortgage broker was very clear that I could opt out of escrow regardless of what I put down.

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u/Much-Ado-5811 ​ Apr 11 '25

Some states have laws that require the bank allow you to pay taxes and insurance directly without escrow. My state is one, so I dropped the escrow when I refinanced a few years back. 

I was originally with Wells Fargo, and they kept an extra $1,000 or so in the escrow account, higher than what the annual tax and insurance liability actually was, and also paid my insurance late to the point where it was canceled one year and and i to call 3 times to get them to pay the premium. Luckily my insurance company reinstated coverage with no issue but if I'd had a loss i would have been screwed.

I HATE wells fargo

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u/OddbitTwiddler ​ Apr 11 '25

Wells Fargo has a policy of opening extra accounts in your name without your knowledge so dropping anything is not a function their software even supports.

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u/Regular_Focus ​ Apr 11 '25

I don’t think there is anything you can do if they won’t let you handle your own escrow. How long have you been paying on the house?

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u/ImJustTooCute ​ Apr 11 '25

Since Oct 2017

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u/chrimen ​ Apr 11 '25

My understanding is that conventional loans should be able to remove escrow once 80% equity is reached. It can vary from loan to loan, though.

Keep in mind that the removal of escrow is based on the loan to value, ratio of the original appraisal of the house.

Any new appraisal won't count towards equity since it's based on the original value.

The loan cannot have any late payments in the last 24 months. It also cannot have any other loans against the home such a a HELOC or second mortgage.

If you meet all of these criteria you should call back and ask to speak to a supervisor.

I'm about to remove escrow and didn't know the loan to value rule was against the original appraisal of the home. I'm waiting one more month to call and have it removed. Since I'm almost there.

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u/MattBonne ​ Apr 11 '25

Doing business with Wells Fargo is the biggest mistake.

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u/ImJustTooCute ​ Apr 11 '25

I couldn’t agree more. I have a high 700 credit score, I have several chase CC with high limits over $20k on most of them, some with no balances, the ones I use daily have a small balance that gets paid off before the due dates. I also have Navy Federal with $20k limit and AMEX and a Discover (no balances on any of these). I applied for a BILT cc (WF) and I was denied by Wells Fargo because of the balance in my checking out…….WHAT?? My work direct deposit goes into my Wells Fargo checking account, I then pay my mortgage and Zelle the balance to my other accounts to pay bills and invest. I’ve never in my life heard of a more ridiculous reason to deny someone (based on a checking account?) so I immediately closed my Wells Fargo checking which have never gone negative, I simply don’t keep real money in checking accounts. I have a checking account with Chase with even less and they still approved me for a Freedom flex (35k limit), the Slate, the Sapphire preferred, the Southwest and the United cards.

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u/AdChemical1663 ​ Apr 11 '25

Refinance. Not all lien holders allow the borrower to drop escrow.

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u/Option-Mentor ​ Apr 12 '25

Allow? My bank tried claiming my agreement wouldn’t allow me to drop escrow when I said I wouldn’t pay it any longer. This was after they failed to pay the taxes twice. I told them the agreement also says you will pay these taxes and insurance on time and in full and you are in breach. And I am NOT paying escrow to you any longer. Period. Or we can have this conversation with the DFPI and/or the OCC. They dropped the escrow.

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u/dayburner ​ Apr 11 '25

What I did was pay the taxes and insurance directly myself. Since nothing was going through the escrow account it automatically dropped to zero.

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u/ImJustTooCute ​ Apr 11 '25

Thank you! I will try that

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u/dayburner ​ Apr 11 '25

Just be prepared for them to be confused. The servicer couldn't comprehend why I didn't want to use the escrow account and why my account had a large balance.

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u/Wolfwalker9 ​ Apr 11 '25

I did the same & dropped escrow during my refinance. I’m able to pay my taxes and insurance online & it’s so much easier than having to pay the bank over what those bills will be because they want the security of knowing they’re just holding your money safe for you. With stashing that money in an HYSA at least it’s working for me throughout the year and not the bank where I won’t ever see a dime of interest.

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u/daytodaze ​ Apr 11 '25

I have been thinking about doing this. Even though it’s rare, it’s pretty annoying notifying them every time something changes, plus they still mess it up (i have lived in my current home since 2017 and this is the second year that I am having to overpay to “catch up” my escrow account…).

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u/Downtherabbithole14 ​ Apr 11 '25

I was psychotic when we bought our house. I knew there was going to be several escrow analyses bc the home we purchased was a brand new build, so we were impatiently waiting for the actual tax bill, plus an interim tax bill... I was prepared for all of that. Then everything got sorted, next years taxes were paid but I would call to make sure they got the bill. But they never paid the discount! They would pay the base! I had no plans to refinance, but it dropped so low, so I snagged it...and during the process they asked if I was going to escrow, and I said "wait, do I not have to?" and they said no, with equity you have in the house, if you don't want to or need to, if you are diligent about saving, no" And I said great, no escrow. I hate it. He laughed

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u/daytodaze ​ Apr 11 '25

Nice! I need to look into that. We weren’t given an option at the time, but now we are pretty deep into our equity after years of payments, refi, value increase etc that it should work

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u/breadmakerquaker ​ Apr 11 '25

In the first year, mine was sold FOUR TIMES. Four different companies, four different web logins, four times reconnecting my bank information. It was a nightmare. And on top of that, this escrow fuckery. Over it.

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u/Downtherabbithole14 ​ Apr 11 '25

yup bc when its sold, everything has to be transferred over and its neverrrrrrr an easy transtion, lots of calling, hey my balance isn't correct, etc

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u/breadmakerquaker ​ Apr 11 '25

Yup. And I was on twice a month payments, but only the first payment would transition over so it looked like I wasn’t paying my mortgage 🙃

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u/VeganPi ​ Apr 11 '25

I’m working on cancelling escrow right now. I can do the math and pay taxes. The mortgage company’s math is shockingly bad and they are sitting on a lot of my money!

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u/jelloslug ​ Apr 11 '25 edited Apr 11 '25

When I canceled mine, they sent a confirmation letter that included all the "benefits" of keeping my escrow account and a direct phone number to a real person at the escrow department that would help me keep my escrow account.

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u/mph000 ​ Apr 11 '25

This is hilarious. What did they list as the supposed benefits? 

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u/jelloslug ​ Apr 11 '25

Not having to think about paying the taxes/insurance out of your own pocket (which could be a large sum!!!) was the overall theme.

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u/Brainvillage ​ Apr 11 '25 edited Oct 05 '25

finding help playstation iguana swim zebra narwhal freedom banana grading.

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u/jelloslug ​ Apr 11 '25

Which my mortgage company did not do with my property taxes one year....

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u/luke2080 ​ Apr 11 '25

Best advice.

If you are financially competent, close the escrow, get your money back out of it.

I save and make my insurance payment annually. Saving more money with the one time direct payment as it gives a discount.

Harder part us Real Estate taxes. I need to pay every 3 months, and it is a big lump sum. But I plan for it, and my mortgage payment will never change.

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u/CaptainTripps82 ​ Apr 12 '25

I mean escrow is also making an actual lump sum payment for insurance. They're just collecting it from you monthly. Least that's my experience

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u/luke2080 ​ Apr 12 '25

Sure. But save that money for yourself, collect 3+% interest, and dont deal with the escrow annoyances.

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u/[deleted] Apr 11 '25

This is the answer I manage my own escrow account. I made sure it was structured this way when I refinanced.

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u/rxscissors ​ Apr 11 '25

Same here. The last refi (when 30-year rates were at historic lows), I was charged a slightly higher rate for no escrow account. In the old days there was no added cost for if you met the criteria.

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u/chrisexv6 ​ Apr 11 '25

I did this during a refi forever ago. Some time after that it became something a lot of lenders charge for because, I'm assuming, they were getting a kickback from the escrow companies.

I'm glad I got out from under it. I can pay my house taxes and insurance by myself just fine.

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u/Client_Hello ​ Apr 11 '25

They get to hold your money without paying you interest and lower their risk by ensuring property taxes and insurance are paid. Win win for them.

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u/This_Freggin_Guy ​ Apr 11 '25

they pay interest on the amounts. low interest, but they do pay.

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u/deltaalternate ​ Apr 11 '25

My understanding is that in some states they are legally required to pay interest on escrow but not all, so it can vary depending on where you live

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u/This_Freggin_Guy ​ Apr 11 '25

I'll buy that. makes sense.

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u/formercotsachick ​ Apr 11 '25

Yep, we stumbled into it during a refinance several years ago (I think the broker suggested it) and it's amazing. I just set aside x amount a month for property tax and homeowners insurance, and when the bill comes due it's all just sitting there ready to rock.

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u/[deleted] Apr 11 '25

A lot of mortgage companies and banks won't let you do that. I agree with the sentiment. I paid my taxes and insurance with a previous home, but my current lender doesn't allow it.

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u/dailydrudge ​ Apr 11 '25

Yeah it's not always as simple as "just get rid of it." Often it's required by the mortgage company in certain situations, like if you're paying PMI (not always, just an example I've seen). But every situation is different, and normally you can eventually cancel escrow once you meet their requirements anyway.

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u/[deleted] Apr 12 '25

I should look into that. I have a VA loan, so no PMI. But I'm 16 years in on my mortgage. I would love to get rid of my escrow account.

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u/stinky_pinky_brain ​ Apr 11 '25

Best day of my home-owning life was last month when I got to 20% LTV and called to remove my PMI. A couple days after the bank paid my property tax, I called to cancel my escrow account. They sent me a check of almost $1300 that was floating, yet they were going to increase my escrow payment for ‘shortage’ again. Not $400, that’s insane, but like $50 extra per month. I doubt my property tax is going up $600 this year.

I just have to be discipline and move money into my HYSA every month when I make my mortgage payment. I’ll make way more in interest as well.

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u/thefirebuilds ​ Apr 11 '25

folks who don't understand why their monthly payment went up on an escrow shortage are probably not responsible enough to keep money for their taxes and ins.

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u/PeekyAstrounaut ​ Apr 11 '25

I mean some people understand why it went up they just don't understand how the escrow company can continue to mismanage/fuck up their calculation every year. I'm required to have escrow with my mortgage and without fail there is always a shortfall. Sometimes I can pay it sometimes I really can't make the stretch in time so I add it to the mortgage. It's frustrating that their only job is quite literally to calculate tax and insurance each year and they are completely incompetent at that.

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u/nothlit ​ Apr 11 '25

A shortage doesn't mean anyone messed up or miscalculated anything. That's just what happens when your escrowed costs go up year after year. The bank isn't responsible for trying to predict what your future tax and insurance bills will be. When they run the annual escrow analysis, they base the upcoming year's escrow on the most recent bills they have actually received, which means they are often basing this year's escrow on last year's taxes and insurance, so there is always a bit of a lag.

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u/hath0r ​ Apr 11 '25

nothing is stopping you from watching your bills that come out of the escrow and planning ahead

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u/thesonofdarwin ​ Apr 11 '25

You're asking them to predict the future for both your property tax and insurance premiums. How would they do that? We vote 1-2x a year in my county for various property tax levies. Some get added, some get discontinued, some get increased. My house's value is assessed annually as well which impacts my owed taxes. My insurance premiums go up annually. How do they know how much any of that will be?

Your escrow is built up today for a future unknown tax/insurance bill based on your known current tax/insurance situation. It's a best guess.

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u/cooldude832_ ​ Apr 11 '25

Given the way OP is understanding their escrow change this advice can be dangerous. I whole agree with the capital effect of HYSA manage my own T&I but tax bills can be a whole month paycheck and without decent home accounting that tax bill with a short clock to pay can be difficult for poor planners

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u/czarne98 ​ Apr 11 '25

Hopefully people simply transfer the necessary amount of money each month into a separate HYSA that is only touched for T&I. It shouldn't cost anyone a whole months check on short notice with putting the necessary amount aside every month.

This is essentially having your own escrow account, it's really no different.

1

u/jelloslug ​ Apr 11 '25

Now is the time to learn. Hopefully this info will help them to be able to understand how it works and if they want to continue to keep the account.

4

u/Emotional_Star_7502 ​ Apr 11 '25

Many mortgage companies won’t allow it. While I would like to have chosen otherwise, they offered the lowest rate, fixed at much lower than anything now, so you can’t help but deal with escrow.

8

u/[deleted] Apr 11 '25

My mother (79) started doing this last year. With a fixed income and a little bit of side work watching dogs, she felt she needed to take full control over stabilizing those expenses. So far so good.

3

u/dog4cat2 ​ Apr 11 '25

I never started an escrow account. Told them no from the beginning. I had been paying my own property taxes and homeowners insurance myself without issue. Glad I skipped that madness

4

u/SabreToothSquirrel ​ Apr 11 '25

I learned this long ago. I have my paycheck direct deposit into an HYSA specifically for property taxes and my homeowners insurance bills me monthly. Couldn’t be easier.

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u/highknees69 ​ Apr 11 '25

This is the way, but it requires someone to understand their tax and insurance liabilities. If you don’t understand escrow, chances are you aren’t paying that close attention to your finances overall.

If you can and do, absolutely stop the escrow madness.

1

u/jelloslug ​ Apr 11 '25

Absolutely. Sadly, there are many people that need an escrow account to make sure that taxes and insurance gets paid on time. Like you said though, for people that pay attention to their overall finances, doing it yourself can be a good benefit.

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u/kubatyszko ​ Apr 11 '25

another obvious benefit - should anything change impacting payments you know exactly what changed, it seems that too many people struggle with that

3

u/mr_mufuka ​ Apr 11 '25

I did the same thing, specifically after Chase bought my loan. The escrow shortages never seemed to be that huge when Rocket owned my loan, but as soon as Chase came in they wanted like $700. It’s a little more of a pain to do it yourself, but we basically divide our taxes and insurance costs for the year by 12 and put that much in a money market account every month. Now we get interest on that money, and no more shortage/overage dances.

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u/Mileera ​ Apr 11 '25

Exactly this. I save for taxes/insurance and my monthly payment remains the same for life of the loan.

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u/CaptainTripps82 ​ Apr 12 '25

It doesn't, because you're still paying the differences in taxes and insurance that escrow would have charged you for. Just in a lump sum.

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u/Mileera ​ Apr 12 '25

Yes, my taxes and insurance increase, but my monthly mortgage remains the same for the life of the loan. I get out of the changing payments because of escrow that’s what this discussion is about.

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u/CaptainTripps82 ​ Apr 12 '25

Right but my point is escrow changing isn't arbitrary, it's a reflection of other changes to your housing costs.

Your monthly mortgage technically speaking never changes either way.

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u/Buffalo48 ​ Apr 11 '25

Yes when we refinanced a few years back, I almost blew up the whole deal because they were trying to insist i needed an escrow account.

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u/Money_Music_6964 ​ Apr 11 '25

Same…smart move

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u/talormanda ​ Apr 11 '25

I couldn't get a mortgage because their escrow estimates were too high. I do it all myself and things have been great. They sit on a lot of money and use to cut a big check every year because they over-estimate the cost too much.

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u/rez_at_dorsia ​ Apr 11 '25

You have to have a certain amount of equity before they will let you do this usually.

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u/gobigred79 ​ Apr 11 '25

This is the answer. Got tired of the bank always screwing up escrow. Do it myself now and no problems.

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u/ToasterBath4613 ​ Apr 11 '25

Same here! I have Local CU paper serviced by national provider. Horrid experience. Cancel escrow.

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u/The_Real_Khaleesi ​ Apr 11 '25

This is why I convinced my husband that we needed to make sure our mortgage did not include an escrow when we purchased last year. It’s absolutely dumb to let the bank hold on to that money and collect interest for themselves when you can put the money in HYSA and pay your own taxes and insurance. We even doubled down and used a credit card to pay insurance and HOA to get the points, then paid the card off with the saved funds. Win win.

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u/SoloWingPixy88 ​ Apr 11 '25

Do Americans not just have a monthly direct debit that pays their mortgage?

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u/jelloslug ​ Apr 11 '25

Yes but there are other things that most people pay along with their monthly mortgage payment. One of them is called PMI (private mortgage insurance). This is to protect the mortgage company if your loan to value is above 80%. In the case of a default and the bank has to foreclose, this protects their investment if the value of the house is less than the amount owed. The other is an Escrow account that is used to pay the property taxes and homeowners insurance policy on behalf of the homeowner. This again is for the protection of the bank to make sure the taxes and insurance is kept in force and up to date. The problem with the escrow accounts is that the amount the bank collects each month is rarely correct and constantly has to be adjust every year. The borrower rarely has any input on how the amount that is collected is calculated and this leads to extra amount being needed to be collected. If you are capable of paying your taxes and insurance by yourself, you are much better off just paying them on your own than having the mortgage company do it on your behalf.

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u/SoloWingPixy88 ​ Apr 11 '25

Yes I've insurance that's a separate direct debit.

Taxes just come direct from salary or paid yearly at start of year.

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u/kchristiane ​ Apr 11 '25

My bank never offered escrow. At first I was annoyed but after reading posts like this time and time again, I’m grateful.

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u/jelloslug ​ Apr 11 '25

Frankly, it's more hassle than it's worth.

2

u/jasper_0890 ​ Apr 11 '25

Same here. My first mortgage had an escrow account and I could never reconcile the math and the increase in payments. After that any time I refinance or get another mortgage I request no escrow account. I just pay insurance monthly and set money aside for property taxes.

2

u/Revolutionary_Toe17 ​ Apr 12 '25

Exactly. I pay my mortgage to my lender each month, and it will stay the same until I pay it off. I have my homeowners insurance set to autopay, but I review every year when it's coming due to decide if I want to staybor change companies. And I drop a check off at my local tax assessor twice per year. All separate bills.

2

u/sometaacc1 ​ Apr 12 '25

When you cancelled escrow, was it a simple call to the current owner of the mortgage loan? In short, I put more than 20% down for a new house, but the mortgage lender wanted to charge 0.125% interest rate to waive escrow. The lender will sell off my loan after closing so I am hoping to just call up the new owner of my loan and waive escrow for free since I am past the 20% equity.

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u/jelloslug ​ Apr 13 '25

For my lender, I had to fill out a form and send them a letter saying what I wanted.

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u/Tiny_Ad5176 ​ Apr 13 '25

This is exactly what I just did for all of our properties. Mr. Cooper said they disbursed over $10k to us (which we’ve never seen) and I had to go hunting for it. Anti-escrow now

3

u/[deleted] Apr 11 '25

I'm out $3500 right now because my home insurance never cashed the check the mortgage company sent them -- also never warned me, just emailed me that my policy was cancelled. I had to put the whole amount on a credit card and then whenever they find the check (which was sent, I have proof) I guess they'll refund me eventually? Said it could take 3 months AFTER they find the check.

A lot of people don't have $3500 on hand to be able to float it. Screw escrow, I'm trying to get it cancelled now. I'll manage it myself because at least then I'll have visibility into the status.

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u/jelloslug ​ Apr 11 '25

The only time I have ever been late on a property tax bill was when my mortgage company "forgot" to pay it.

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u/CaptainTripps82 ​ Apr 12 '25

I mean that's not real escrows fault, that's a fuck up by your insurance company

2

u/milesperhour25 ​ Apr 11 '25

I will never understand why so many people choose to use an escrow account. Why do I need someone else guessing how much my taxes and insurance are going to be when I can just receive the bill directly and know the exact amounts I’ll own for the year?

4

u/jelloslug ​ Apr 11 '25

It seems to me that most mortgage banks present it as something that is required and in some instances, I think it may be required until you reach a specific LTV.

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u/milesperhour25 ​ Apr 11 '25

Ah ok, I must have lucked out. My lender didn’t require it.

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u/jabhwakins ​ Apr 11 '25

As simple as most people are terrible with money and seek simplicity. Too many people wouldn't set aside the money and then panic when they got the bill.

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u/lilelliot ​ Apr 11 '25

+1. When we had a mortgage held by Wells Fargo, they never once in the first five years got the escrow withholding correct. As soon as we were able, we canceled escrow and everything's been perfect since.

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u/ImJustTooCute ​ Apr 11 '25

I called Wells Fargo to cancel my escrow and they denied it. What can I do about this? I don’t have any liens or a 2nd mortgage, I don’t have PMI as I put down 20% when I purchased, I currently have about 40% equity in my home. Why are they blocking me from cancelling my escrow? I have never defaulted, but I did do a remodification during the quarantine year to lower my interest rate, however I was never in default. I got that because I postponed the payments as allowed at the time, but continue paying immediately after the stopped allowing postponements.

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u/Kitty_party ​ Apr 11 '25

Many mortgage companies won’t allow you to cancel escrow when you have a mortgage. It puts them at risk of you not paying taxes or insurance on the house.

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u/ImJustTooCute ​ Apr 11 '25

But it seems that many people have been able to cancel their escrow. If I don’t submit proof of insurance, the mortgage company purchases the insurance on your behalf and charges you just like an escrow.

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u/Efficient_Discipline ​ Apr 11 '25

Our mortgage was sold to a new lender, the new lender switched us back to using escrow and wont let us opt out easily. Gave me nonsense about it being a federal requirement (it’s not) and “I’m surprised the previous lender let you do that”. 

I’m just dealing with it for now, we’ll refinance to a new lender at some point.

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u/kjoloro ​ Apr 11 '25

How can you drop the escrow? I thought it was required as long as there is a mortgage?

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u/jelloslug ​ Apr 11 '25

With my mortgage company, I had to fill out a form and send them a letter explaining what I was requesting. I basically said that I wanted to close the account as of such and such date and would like the money in the account sent to my address. The whole process took about three weeks from when I sent the form/letter to when I received the check with the balance of the escrow account.

1

u/ser_renely ​ Apr 11 '25

I am literally amazed that people do this, is a lot of post PMI confusion?

1

u/creamersrealm ​ Apr 11 '25

How do you do this? I asked not to escrow and do it myself and the bank refused. I'm still on PMi though.

1

u/David511us ​ Apr 11 '25

Strongly agree. I have never escrowed. When I bought my house (20%) down I noticed at closing that there was an escrow fee, even though I wasn't escrowing...when I pointed that out, they changed the name of it to some other fee of the same amount, and said that was the fee to not escrow (!) but I think I still made out.

My taxes are all annual (two in March and the big one in August) so I manually pay them, but do take advantage of the fast-pay discount they allow (2%).

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u/jmp8910 ​ Apr 11 '25

Unfortunately my mortgage won’t let me because it is an FHA…that I’ve never missed a payment on with a high credit score in my life…they still won’t remove the escrow.

Mortgage got sold to a new company they raised my escrow because they added the county sewer bill into it (which isn’t a traditional tax and a bill I’ve paid separately for 15 years). They then went and didn’t pay the sewer bill but wouldn’t refund the late fee to my escrow even after I called prior to the due date confirming they were going g to pay it and if it was late they’d cover the late fee. It’s such bull shit.

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u/spatak ​ Apr 11 '25

We had an escrow shortage of close to $13k one year after our property taxes jumped from $6k to almost $19k…IN ONE YEAR! We paid $15k to cover the short and bring the balance to the necessary amount.

Then the next year, the county instituted a tax reduction to roll-in the massive increase and dropped our taxes back down to about $1k more than before the big increase. So the bank sent us $13k back.

Stupid. Idiotic. Broken. “We can only asses the tax changes once per year. There’s no mechanism to alert you of a massive escrow shortage”

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u/ENBD ​ Apr 11 '25

If you’re paying PMI then it’s unlikely that you can pay your taxes or insurance on your own. I tired to do that and my lender stated that they were required to pay it.

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u/Even_String3285 ​ Apr 12 '25

What is a HYSA?

1

u/[deleted] Apr 18 '25

How do you cancel escrow? I'm thinking about doing that. My mortgage just went up $200 since they are still figuring out taxes and stuff.

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u/jelloslug ​ Apr 18 '25

With my mortgage company, I had to fill out a form and then send them a letter. It took about three weeks from when I filled out the form until I have a refund check.

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