my escrow went up 1K this year

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Heretolearn12
Posts: 3
Joined: Thu Aug 03, 2023 3:48 pm

my escrow went up 1K this year

Post by Heretolearn12 »

Our mortgage payment on our 469K house just went up to 1000/month. We live in Illinois. I called the bank and they're telling me because of taxes and insurance.
How common is this? What can I do? Please help.
02nz
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Joined: Wed Feb 21, 2018 2:17 pm

Re: my escrow went up 1K this year

Post by 02nz »

Did you ask them whether you could have the escrow removed (and make necessary payments yourself)?
Grt2bOutdoors
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Location: New York

Re: my escrow went up 1K this year

Post by Grt2bOutdoors »

Heretolearn12 wrote: Tue May 14, 2024 7:32 pm Our mortgage payment on our 469K house just went up to 1000/month. We live in Illinois. I called the bank and they're telling me because of taxes and insurance.
How common is this? What can I do? Please help.
Quite common. Many mortgage lenders demand an escrow account be kept to ensure that taxes are paid promptly. Usually they want two months escrow in the account at all times. The home insurance you can usually pay it directly to the carrier. Even if you get the lender to not have an escrow account you are still on the hook for the property taxes. If you fail to pay your property taxes on time, the local government will charge you interest for non-payment and after a period of time could sell the tax note to an outside investor who can charge you alot more interest while also attaching a tax lien on your home.
Last edited by Grt2bOutdoors on Tue May 14, 2024 7:48 pm, edited 1 time in total.
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marielake
Posts: 202
Joined: Fri Mar 14, 2014 5:39 pm

Re: my escrow went up 1K this year

Post by marielake »

Its pretty common. My home insurance goes up every year.

You should call your home insurance company and talk about options including an increased deductible. For that matter, check with several insurance companies.
marielake
Posts: 202
Joined: Fri Mar 14, 2014 5:39 pm

Re: my escrow went up 1K this year

Post by marielake »

duplicate
Last edited by marielake on Tue May 14, 2024 7:50 pm, edited 1 time in total.
123
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Joined: Fri Oct 12, 2012 3:55 pm

Re: my escrow went up 1K this year

Post by 123 »

You could shop around for lower cost insurance that still meets the requirements of your mortgage.

Taxes are a matter to address with your elected officials. Why do they need to spend so much?
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exodusNH
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Joined: Wed Jan 06, 2021 7:21 pm

Re: my escrow went up 1K this year

Post by exodusNH »

Heretolearn12 wrote: Tue May 14, 2024 7:32 pm Our mortgage payment on our 469K house just went up to 1000/month. We live in Illinois. I called the bank and they're telling me because of taxes and insurance.
How common is this? What can I do? Please help.
[Unnecessary comment removed by admin LadyGeek]

Shop insurance.

Raise your deductible.
RJC
Posts: 1530
Joined: Fri Dec 14, 2018 12:40 pm

Re: my escrow went up 1K this year

Post by RJC »

Search your state. 2023 was a really bad year for home insurance companies in Illinois.

https://www.nytimes.com/interactive/202 ... =url-share
LittleMaggieMae
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Joined: Mon Aug 12, 2019 9:06 pm

Re: my escrow went up 1K this year

Post by LittleMaggieMae »

Heretolearn12 wrote: Tue May 14, 2024 7:32 pm Our mortgage payment on our 469K house just went up to 1000/month. We live in Illinois. I called the bank and they're telling me because of taxes and insurance.
How common is this? What can I do? Please help.
Property taxes go up every year. Well, for me, every year for the last 30 years. :)
Insurance costs have gone up dramatically in the last 2 years.

You should have gotten a letter from your lender about the increase to escrow. The letter should have explained the increases. It should also have explained if you have any options for paying the increase (a lump sum? an amount to pad the escrow account and then leave the mortgage payment the same? something else?)

If you haven't seen that document - you should look for it - log in to your account and check for documents/statements. If you can't find it - call and ask HOW you can see it. That document will help explain what happened. Both Bank of America and Wells Fargo sent me a very comprehensive notification MONTHS before my mortgage payment went up. It showed what I was paying for PI and then Taxes and Insurance - and then showed the new ESTIMATED taxes amount and the new Insurance cost amount. And what the new payment would be and what options I had for payment. It explained how much of the TOTAL they wanted me to have in the escrow account and gave me options for how to accomplish this. I pay my own property taxes and insurance for my Chase mortgage. But I imagine Chase sends a letter/document when a mortgage payment goes up.

After you've reviewed the official document - you can review your insurance policy - especially if you just let it "roll over" from last year without checking any of the information/documents your insurance company sent you about the new policy. The insurance company may have reset any of the options you set on the policy when you set it up the first time. (I absolutely HATE that any time I set a deductible or decline the useless flood insurance (my lender doesn't require it) at renewal the deductible switches to the lowest possible AND the useless flood insurance gets added.)

When you discuss your policy - ask how the age of your roof effects the cost. Ask if there are any other things about the house that are effecting the cost (the swimming pool you don't use? the really old Aluminum Siding? Something I don't know about because it doesn't effect my house?) Add that information to your "list of things to possible deal with in the future" as in remove the pool, maybe reprioritize the maintenance that will help lower your insurance sooner than you were planning.

Next, make sure you are getting whatever exemptions/discounts on your property tax that you are entitled to. You may need to file your Homestead whatever thing (because it is your primary home) EVERY YEAR. If you are a veteran or a senior citizen - see if there is something for that. See if there's some other benefit you are entitled to that you need to apply for.
Look at your Tax Bill (you should have gotten one in the mail OR you should be able to look at it on line). You may find some useful info there. Compare previous year to current year - what changed? Can you do something about that change?

When you can appeal your taxes - do so. You get to learn all about the property tax laws and about how other properties that are like yours are being taxes. :) Just do it, it sucks the first time - but once you get the hang of it and you get it on your calendar it's just another Seasonal House Chore.

Managing your property taxes is a yearly or every other year kind of thing. Managine your insurance cost is a yearly thing.

FYI: the reason someone might tell you to NOT escrow property taxes and insurance is because of the Amount of Money the lender wants to keep in the account. If you don't have the escrow account - you may still get blindsided by a big Property Tax bill or a Big Insurance bill.
With or without escrow you NEED to pay attention to your property taxes (they don't just go up out of the blue - there is usually a lot of warnings months and months before hand - you might even be voting on stuff that effects your property taxes...) and you NEED to review/pay attention to your insurance every year. If you don't use escrow you may still need to "pay" 1/12th of the amount you estimated you will need for Taxes/Insurance to a savings account every month so you have the money available to pay these Big Lumpy Expenses.
Oddball
Posts: 386
Joined: Thu May 03, 2018 9:35 am

Re: my escrow went up 1K this year

Post by Oddball »

Grt2bOutdoors wrote: Tue May 14, 2024 7:46 pm
Heretolearn12 wrote: Tue May 14, 2024 7:32 pm Our mortgage payment on our 469K house just went up to 1000/month. We live in Illinois. I called the bank and they're telling me because of taxes and insurance.
How common is this? What can I do? Please help.
Quite common. Many mortgage lenders demand an escrow account be kept to ensure that taxes are paid promptly. Usually they want two months escrow in the account at all times. The home insurance you can usually pay it directly to the carrier. Even if you get the lender to not have an escrow account you are still on the hook for the property taxes. If you fail to pay your property taxes on time, the local government will charge you interest for non-payment and after a period of time could sell the tax note to an outside investor who can charge you alot more interest while also attaching a tax lien on your home.
The minimum balance calculation can really throw off the numbers.

We also have mortgages in IL and 2 of the mortgages went up dramatically last year. One mortgage we are currently paying $250 extra a month to make the escrow account "whole" i.e. be at a minimum of 2 months payments. I didn't do anything with that one, just paid the extra as the lender wanted. The other mortgage, with Regions bank, went up something like $1000 a month. I called them, and they said "oh, we can space it out over 3 years instead of 1", so we did that.

OP - did you talk to the lender out spacing out the increase over several years?

In the next week or so I should get the updated mortgage payment info for new payments that start in July from both lenders. I actually expect payments to either stay basically the same or decrease. The $250/month should drop off the first one. The second one had the prop tax info kinda wrong (IL or Cook county released the actual tax number later than normal), we added the home owners exception, and fought/won the prop tax evaluation. Our insurance premium did go up, but just by ~$200.
bberris
Posts: 2461
Joined: Sun Feb 20, 2011 8:44 am

Re: my escrow went up 1K this year

Post by bberris »

Look for your annual escrow statement that shows how escrow was calculated. If the previous years taxes and insurance caused a deficit (minimum balance less than 2 months future annual expenses) there will be an adjustment to fill that deficit, and an increase due to expected charges. So the increase could be relatively large. There's nothing you can do about taxes, but you could shop insurance. You can change insurance any time, not just at the end of the term.
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