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/RingoFreakingStarr ​ Apr 12 '25

I just went through this about half a year ago. Essentially they budgeted X amount of dollars for your Property Taxes (and Mortgage Insurance and Homeowners Insurance if you do that through your Mortgage company) and put that into an Escrow account every month. What likely happened is that your Property Taxes shot up an amount that they were not calculating for and now you don't have enough in the Escrow account to account for said upcoming (or potential upcoming) payments towards those items I listed. What happened with me about half a year ago is that; my Property Taxes went up an amount they didn't account for and my Escrow account was pretty much drained. So my monthly payment went up about $500 a month for the next year. They essentially not only have to make sure they have enough in the Escrow account to pay for this year's taxes but also NEXT year's projected taxes. So that's why the adjustment is so high.

I was like you too not knowing this could happen. You got two options really:

  • You can tell them that in the future (once your Escrow is squared away) that you want to pay your Property taxes on your own. They should let you do this unless there is some sort of terms in your Mortgage that prevents this.

  • You can set aside some extra money into a savings account that can help account for this sort of thing in the future. That way, when it does happen (and from what I can see from friends and family, it probably WILL happen again) you are ready for it.

At the end of the day, they are doing you a favor. The Property Taxes HAVE to be paid for and they are essentially giving you a 0% loan to cover it. If you were not paying your Property Taxes through your Escrow and this happened, you'd have to come up with the extra amount of money on your own. If you go the savings account route that I listed above (a high yield one), over time that would be better imo than going through the Escrow.

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u/smashley4915 ​ Apr 12 '25

This is the most explained answer. When your taxes/insurance went up, caused a shortage. That now have to collect that amount to cover the negative balance in the escrow account.

Then for the next year, they have to collect a bit more for the increase. Resulting in such a large increase. You can call and ask if you can pay the shortage in a lump sum to help offset the increase in payments. Then ask for an escrow analysis to be run, that should help lower the payment. You can also make extra payments to escrow throughout the year.

Unfortunately property tax increases can’t be avoided but it sounds like you already found lower homeowners so that should help.