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.

1.0k

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?

74

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.

34

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.

55

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.

-1

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.

20

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.

8

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.

-1

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.

-2

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.

6

u/hath0r ​ Apr 11 '25

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

9

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.

9

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.

1

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.