Escrow accounts simplify homeownership by bundling property tax and insurance costs into your monthly mortgage payment.
While convenient, the escrow portion of your payment may shift from time to time. Knowing the reasons behind these adjustments helps you plan ahead and better manage expenses.
Common Reasons for Escrow Increases
Tax or Insurance Hikes
Rising property taxes or higher insurance premiums may require larger escrow contributions.
Account shortages
Lenders review escrow balances annually. If funds fall short of covering upcoming bills, monthly payments may be raised to close the gap.
Scheduling changes
Shifts in billing schedules could also create shortages.
How to Adapt to Payment Shifts
- If you pay by autodraft: No action needed; withdrawals adjust automatically.
- If you pay manually online: Update payment settings to match the new amount.
- If you send checks or money orders: Ensure mailed payments shows the updated figure.
Handling Errors
If you think there may be an issue regarding your escrow account, contact us for a review.
Can Escrow Payments Drop?
Although less frequent, payments can decrease. If your account surplus exceeds $50 and you’re current on your mortgage at the time your escrow account is reviewed, we are required by federal law to issue you a refund check.
Preparing for Potential Adjustments
- Track property tax assessments and dispute any errors.
- Explore insurance policy options regularly to avoid paying more than you need.
- If your payments are withdrawn from your bank account automatically, keep a funding cushion in your linked account in case of unexpected payment jumps.
- Request an escrow analysis if you think changes might be on the horizon.
Key Takeaway
If you have an escrow account, escrow fluctuations are part of homeownership. By monitoring taxes, insurance and maintaining a cushion, you can minimize surprises and stay in control of your mortgage budget.