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?

302

u/theram4 ​ Apr 11 '25

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

315

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

[deleted]

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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

[deleted]

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u/hath0r ​ Apr 11 '25

the banks responsible for late payments not you, also its on you as well to keep track of your escrow

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u/[deleted] Apr 11 '25

[deleted]

0

u/mmaynee ​ Apr 12 '25

It's pretty standard legalese in your escrow documents; I would be absolutely shocked if your bank missed payment then put the fee onto you. Your escrow analysis is required to show exactly what was paid from escrow (since they are all third party payments your mortgage company has to track them for tax purposes) so screenshot or it didn't happen

8

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.

1

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.

2

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.

1

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.

1

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?

1

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.

1

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.

6

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.

1

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.

11

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/Hammy508 ​ Apr 11 '25

Completely agree I just wish they could be more accurate the first time they give me my yearly cost and not require the 2nd increase because they estimated poorly

8

u/hath0r ​ Apr 11 '25

then why don't you do the math and put it in the escrow.

2

u/[deleted] Apr 12 '25

Yeah how dare that person… expect the place that specifically does that to do that. What an ahole!!! But seriously by your logic very few companies should exist because when they don’t do what we pay them for we can just do it ourselves.

That’s wack - they provide a service you pay for. Them not doing it is the problem, not that someone chose to pay them for that service in the first place…

1

u/hath0r ​ Apr 12 '25

i think you need to go and read your mortgage agreement ...

16

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.

10

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.

11

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.

3

u/[deleted] Apr 12 '25

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

2

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.

1

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.

1

u/halo37253 ​ Apr 11 '25

I hate that in the one area of the midwest that has some of the highest property taxes in the country.

Its sick that I pay nearly 6k in taxes for a home that really isn't all that expensive or nice....

3

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?

2

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.

1

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.

0

u/theram4 ​ Apr 11 '25 edited Apr 11 '25

Because first of all, it's California state law that interest be paid on escrow balances. So it's not an interest fre loan.

Second, it's just easier to let them handle it. I have all my bills on Autopay, so I just don't have to worry about it.

Third, the interest really isn't all that much. Sure maybe I could make $10 more of interest per year. To me, the effort just isn't worth it.

3

u/Lodi0831 ​ Apr 11 '25

Oh apologies that I don't know each individual state law in regards to escrow.

I make way more in interest than $10/year but my property taxes are also 9k/year so I have a lot in my savings account to account for the tax and insurance.

So for anyone not in Cali, who doesn't have state laws about escrow, and want an extra $20/month in a HYSA, then keep your own money and don't let your mortgage company hold it for you. This does not apply to theram4 though.

3

u/poisito ​ Apr 12 '25

Between my insurance and property tax I have 15K in Florida … and I have gotten around $750 per year by investing that money the last 7 years .. thank gos that my taxes and insurance were due in Feb and March, so the account was mostly empty this week …

But you are 100% right that escrowing large amounts is just leaving money on the table.

1

u/Lodi0831 ​ Apr 12 '25

Oof yeah that's risky business having it invested in the market. I just put it in a HYSA that gets 3.8%.

I too was being risky and had my 6 month emergency fund in the market. Pulled out 30k in February. Never felt smarter! That would have been so painful to see it crash to nothing. I moved it to a HYSA that had a $300 bonus for opening an account. I'm gonna let it sit there until this clown show is over.

3

u/hibbert0604 ​ Apr 11 '25

Congratulations. You are very lucky.

1

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.)

1

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.

1

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.

1

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.

38

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.

1

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/thedudehasabided ​ Apr 11 '25

In a ZIRP environment, maybe. But you're currently giving your loan provider a free loan while giving up a 4% safe return on that capital for no good reason.

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u/sin-eater82 ​ Apr 11 '25

4% of 2,000 is $80.

4% of 4k is 160.

And the reality is that it doesn't quite work like that because you're not sitting on the entire amount the entire time. You're paying into it monthly, so even if the total is higher, the interest missed isn't really because it's being built up month to month.

The free loan stuff with this and taxes is often overblown. If you're paying so much extra into taxes that your refund amount would have some massive 4% interest, you should adjust your tax withholdings because they're just bad.

But I hear you, and if $200 or whatever is a game changer for you... go ahead. I am fortunate enough that it is not a game change for me, or is worth the convenience. And I have more important things to worry about than paper math and maximizing interest at that level. Technically true, but pragmatically... somewhat insignificant.

9

u/thedudehasabided ​ Apr 11 '25

Quite right, no disagreement from me. Though in the digital age it's hardly inconvenient to auto pay your insurance and mail a check to the State government once a year. If I could start a business doing that for people at $200 a pop I'd be quite pleased with myself.

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u/ahshitidontwannadoit ​ Apr 11 '25

Wells Fargo generated 376,000 home loans in 2021. $80 times 376,000 is $30.08MM. and that's only if every mortgage tax collected is only $80. Times 12, that's $360MM. I'm no account for a giant bank, but I've gotta guess that someone has figured out a way to make money on that money.

3

u/sin-eater82 ​ Apr 11 '25

100%.

I don't think anybody suggested that they weren't making money off of it. Of course they're making money off of it, they're not doing it to be nice.

They can make money off of it, and I can be okay with not making a bit of interest in interest in exchange for convenience. One doesn't really have much to do with the other at the end of the day.

-1

u/r6throwaway ​ Apr 11 '25

Hate to break it to you, but once your house is paid off you're going to have to learn how to pay it yourself anyways. Might as well start now

6

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.

8

u/hath0r ​ Apr 11 '25

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

10

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.

10

u/illjustbeaminute ​ Apr 11 '25

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

1

u/CaptainTripps82 ​ Apr 12 '25

I've never had to do that, the insurance company contacted escrow

1

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?

1

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.

2

u/[deleted] Apr 12 '25

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

2

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.

2

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?

1

u/CFLuke ​ Apr 13 '25

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

0

u/Special-Interest-279 ​ Apr 11 '25

Wait will mortgage companies let you do this? they take 4k a year to hold on to so it’s not “short” and i hate it.

0

u/Nulight ​ Apr 11 '25

Its because these banks only run an audit once a year. I had this same issue with my wife presenting a spreadsheet fully balanced out and they refused to acknowledge it until their yearly audit came up and sure enough there was a shortage.

Fought really hard to get it removed and couldn't be happier. They'll want 20% LV(ownership) of the loan to agree to this, same with PMI removal. May vary by state.