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higher mortgage payment : (

March 24th, 2008 at 11:34 pm

I got a thing in the mail today.... guess our escrow account is underfunded or something... I'm going to have to call because I don't fully understand the document, but from reading it, it seems we have two options. One is pay $205.19 which covers the shortage, and our mortgage payment will still get higher, from $767.45 up to $781.50. It's only a few bucks, but that stinks! The second option is they work the extra money on top of our new higher payment which would be $798.60 which is $31.50 extra a month. >: ( I know $31.00 might not seem like a lot to most people, but who wants to have their mortgage payment go up like that every stinking month for the next year?!

So the new payments go into effect on May 1. That means I either 1) can try my hardest and save $205 by May 1st (nearly impossible right now) or 2) take the $205 out of my beloved funded $1000 EF, which since this isn't technically an "emergency" but I'd rather have the payment go up approximately $15 than $30. I can't decide what to do. Maybe our state refund check will come in by then (geeze, where the heck is it?!) and I can use it for that, but I'm not going to bank on it.

Hrmph.

7 Responses to “higher mortgage payment : (”

  1. JanH Says:
    1206402394

    This happens to us all the time. Either the taxes or insurance is higher than they estimated for the year and we end up with a shortfall. Then, they have to estimate again and up the next year's payments. Then add in the shortfall. This last time we paid the whole shortfall up front for the first time. This is something that no one told us about when we bought our house and the insurance almost doubled the first year.

  2. billm950 Says:
    1206402783

    i do not like having the escrow. Its a way for the banks to use your money for other things. I usally separate the amount every month into a seperate acct and when i get the water/sewer, taxes and insurance, i just fund out of that acct. I have about $6k expenses every year and i find it its better to do it on my own then having the bank keep track.

  3. reflectionite Says:
    1206418184

    can someone explain what escrow is? i dont know Big Grin

  4. Mooshocker Says:
    1206453044

    An escrow account is ANY account in which another institution retains your money for the purpose of make scheduled payments or a one time remittance toward a debt.

    Allowing a lending institution to hold your money in escrow is a good thing if you are not capable of budgeting your finances, thus, risk tax/insurance delinquency which can result in foreclosure.

    That said, if you are able to calculate your twelve month tax/insurance premiums, add about 10% to it for increases and place that money in a money market fund or some other saving institution, you are potentially:

    A. Earning great interest than what an escrow account provides you (see below);

    B. Maintaining personal accountability for your money;

    C. Making certain that there is no delay in making payments or making payments too early (see below).

    (A): You DO earn interest and thus pay taxes on any growth via your escrow account. This is not understood by all and should be. That said, it is very small.

    (C): When you take into consideration what a good online account or money market account could earn you, it may be wise to make your tax payments during one or two of the penalized periods since retaining your funds longer may earn you more interest income than what is paid via a small penalty. In any event, paying them on the day they are originally due by going to tax collector in person will certainly help your income growth.

    Bottom line is whenever you maintain control over your money and where it is invested, chances are, if you are a wise and informed investor, you will do much better than some huge lending agency taking charge.

  5. Sami Says:
    1206464316

    Before I refied, I had an escrow account. What a bunch of hooey that was!!!

    The city/county I live in could care less whether or not I have a cushion to pay my taxes. All they want is their money.

  6. terri77 Says:
    1206488489

    I have escrow. They take that amount on top of your principal and interest payments and set aside in a low-interest account. At first when they started taking the escrow payments I was unhappy with it, but I'm glad that they do. My property taxes are low so it's a small amount and I'm glad to have them take care of it. I could technically get out of it now as you don't have to pay escrow if you have 25% equity, but I'd rather stick with it.

    Last year my payments went up, this year my biweekly payments are going down by $5.

  7. Valery Says:
    1224534496

    Is it better to let the banks raise your payment or pay the escrow shortage up front?
    I'm I losing or gaining doing it either way?
    Please advise....Thank youSmile

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