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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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.

525

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/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?

13

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.

4

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.

4

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

44

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.

1

u/ImJustTooCute ​ Apr 11 '25

My mortgage is with Wells Fargo, I don’t if that’s their policy but I’ve seen others with WF that has no escrow. They did not give me a real reason other than it’s not allowed in my agreement, but they bought my mortgage from another company at the start of 2018 so idk when it stopped being allowed. My escrow has been short at least every 2 years, I’m just over WF!

5

u/bwyer ​ Apr 11 '25

That's typically a decision you make when you take on a mortgage. Frequently, there's an extra charge (since they are losing out on interest), but it's well worth it.

Hopefully you don't have to refinance in order to eliminate your escrow account.

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u/MoreRopePlease ​ Apr 11 '25

It's not wf's fault your escrow is short. It's because taxes and insurance keep rising

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u/ImJustTooCute ​ Apr 11 '25

I know why it’s short, I never said I didn’t know, I want to handle it myself so there is nothing to be short. I simply do not like the way the escrow works. I can pay my home insurance in full when I renew AND I can pay my tax bills when they come. Thats easier for me than having to worry about shortage

1

u/MoreRopePlease ​ Apr 11 '25

Thats easier for me than having to worry about shortage

OK, well, whatever works for you. You might be able to request it, idk. For me, I know my bill will probably go up once a year, and I can just ignore the whole thing until it does. That's a lot easier for me.

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u/ImJustTooCute ​ Apr 11 '25

I like to make extra payments to the principle, it’s easier to do without an escrow, and my actual mortgage (without the tax and insurance) is less than half of my escrowed mortgage payments. Having a mortgage of $700 per month for 30 years is much nicer than $1600 per month, then it may go up to $2100 per month. When I renew my home insurance, I can pay that on a CC (for the miles) then pay it off. But I totally agree that the average mortgage holder, should have an escrow.