Is it normal for your mortgage (escrow) to go up without any sort of notice?

I happen to log into my mortgage account (roundpoint), and there was already a 9/1 bill, I open it and see it's increased $482 per month. Principal/interest are fixed, so it's escrow, going from $1017.72 to $1500.60.

I log into USAA to look at property insurance bill, it increased $2k (40%.. another discussion!!!) for this renewal. Ok, so thats $166.
I log into county assessor, last year was $5k, this year is $6400, ok that's another $120 or so, we're at $280.

How do I found out why it went up another $200 on top of taxes/insurance? Aren't they required to notify me about this kind of stuff and explain what's going on and/or show their calculations of escrow future?

Just 2-3 years ago my princ/interest/escrow was $1900.. this is getting out of hand. $12k more a year now.

Any ideas why it would go up nearly $500 if insurance/taxes is only $280 more?

What ac said.

ac04 said:

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if the escrow was short the previous year, they're going to collect enough to cover that as well. that's the only thing i can think of that would make the increase higher than just the additional insurance/taxes.

i believe they are also allowed to keep up to 1/6 of the total expected amount as extra money in there as a reserve to ensure they don't wind up short. as your escrow increases, so does the reserve.

see if you can find an annual escrow analysis for more details.

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I think this is right. I believe they're required by law to supply you an escrow analysis that lays this all out. It's probably somewhere in your account documents on their website. It used to be an area where the mortgage companies really stuck it to the customer, but regulations have tightened up significantly over the years. I'm fairly certain that part of your increase is to recapture under-escrowing from the prior year - pretty commonplace. You of course have the option to pay the underage all at once, but I think it's an interest-free catch up (someone confirm???), so you might as well pay it over time.

Also, I believe you have every right to quit escrowing. Some mortgages "require" it to get a lower rate, but after a while (a year or two), there's nothing legally stopping you from exercising your right to do it yourself.

Aggie71013 said:

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Can you stop escrowing? I didn't escrow and pay for tax and insurance out of pocket.

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That's a good question, i feel like at this point I would rather list pay it myself since I can seem to figure out how much I need better than they can.

I decided to call them. Above poster has it right, they fronted me money apparently because they were short.
Then, for several months instead of raising my monthly payment to cover that fronted payment, they kept it the same but they applied some of my normal payment to the borrowed amount. You can imagine what happens next; Fast forward, now I'm thousands behind.

Laughable how bad they are at managing this simple concept.

So instead of raising me 6-12 months ago or whatever, to cover the shortage, I got ever further behind and now have a huge increase to makeup for their dumbassery.

I did call usaa and shaved off almost $1000 yearly by making a few adjustments.
My personal property was a percentage of the value of home. Well my home has more than doubled in 12 years so I had nearly $500k of coverage, way too much.
Also raised deductible from $500-$2000.

When we had an escrow at our last place we dealt with this and it drove me crazy. It always felt like they were very slow to react as well, but I'm sure they had reasons for doing it when they did.

Now we don't escrow and I just make annual adjustments to how much I stash away based on my expectations for increases in taxes and insurance, and as soon as those numbers become fixed I adjust it to get it dialed in within $1,000 or so.

it's been about a decade since I dealt with escrow for mortgage....at that time the deal was they wanted at least 2 months worth of payments in reserve and could adjust to recoup if short one year and then increase for next. Basically a double whammy.

I simply set up another account and transfer money there every 2 weeks to cover homeowners, taxes, and HOA fees. When time comes for bills are due I have the money ready. Then usually sign up for some sort of CC to get rewards for paying a large bill I was going to pay already. Reevaluate at the start of every year to see if need to change the biweekly contribution.

Easy peasy....and if anything got me my 2 months of escrow the bank was making money on too

trip98 said:

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it's been about a decade since I dealt with escrow for mortgage....at that time the deal was they wanted at least 2 months worth of payments in reserve and could adjust to recoup if short one year and then increase for next. Basically a double whammy.

I simply set up another account and transfer money there every 2 weeks to cover homeowners, taxes, and HOA fees. When time comes for bills are due I have the money ready. Then usually sign up for some sort of CC to get rewards for paying a large bill I was going to pay already. Reevaluate at the start of every year to see if need to change the biweekly contribution.

Easy peasy....and if anything got me my 2 months of escrow the bank was making money on too

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wait you can pay taxes and homeowners insurance with a credit card typically? With no fee? Dang why didn't I think of this? I'm a huge credit card points person.

Homeowners, yes. I could see some charging fees, though.

Our CAD, Harris County, charges a fee to pay taxes with a CC, think it's 2.5%. That info should be on yours' website.

htxag09 said:

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Homeowners, yes. I could see some charging fees, though.

Our CAD, Harris County, charges a fee to pay taxes with a CC, think it's 2.5%. That info should be on yours' website.

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In my experience, the relatively few tax districts, insurers, and HOAs that accept credit cards typically charge 3.0-3.5% for credit card payments. But at least some of them call them "convenience fees" .

I know this doesn't help OP - but... Escrow sucks - avoid it if you can

Lots of good and correct info but there's one thing I didn't see...

Your servicer also very likely requires a 2 month buffer. So when you get a big increase in insurance and/or property taxes they're going to want to boost that buffer as well.

Also can't hurt to ensure they're basing next years property tax (not going into "that" argument here) based on the estimates. When you get your appraisal in (usually) March or April it will use the previous years rates. Rates aren't actually set for the year until late summer when the final appraisals are in and budgets are final. So in years of rising appraisals rates (especially for bond debt service) will end up declining to match. Debt service can't raise more money than needed to pay the debt.

The Collective said:

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I know this doesn't help OP - but... Escrow sucks - avoid it if you can

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I found an escrow removal request form on the mortgage company's website. I just sent it in. There is big list of criteria to meet, but at quick glance I'm pretty sure I was good on all of them. I'm way below 80%, no late payment issues, no pmi, etc.

This will actually help a lot because my homeowners insurance was just paid in full at the end of May.
Next may, when that insurance policy renews, I don't have to pay in full, I can pay usaa monthly, and with a credit card. That's another 12k points a year on my marriott amex.

If/when escrow is removed, it will help a bunch as my p/i is only $1400, then I'll set aside $500 for taxes, which is $1900, instead of the $2900 they wanted starting 9/1. I don't have to set aside the $500 for insurance since it will be monthly next may.

Just saved my self $1k a month until next may.

It's a 45 day notice requirement of payment changes. You might've gotten a new escrow analysis in your August statement and just didn't notice. Sometimes they're sent separately.

You can do your own escrow analysis by taking the schedule of disbursements, schedule of deposits, locating the low balance in the account (either when taxes or insurance are paid, depending on when they're paid, usually taxes in October or December depending on county), taking the total of escrow disbursements (tax, hoi, flood etc) dividing it by 6 and subtracting the 1/6th value from the low balance to determine any shortage. That shortage is then spread over 12 months.


You have the option to pay the totality of the shortage to reduce your payment, but you're functionally giving up an interest free loan.

That makes sense. It never felt like it was them personally, but whatever processes they adhere to.

I see it has already been posted but it needs to be reiterated. If possible, DO NOT ESCROW!. Taxes are due once a year, insurance once a year, so put those amounts aside, either monthly or all at once, preferably into an interest-bearing account, and pay your own way! While earning interest on your own money.

I agree, avoid escrow.

But....just be aware that if you change insurance it's on you to notify your mortgage company. If your mortgage is sold, it'll also be on you to confirm the new mortgage company has your insurance info and it aligns within whatever requirements they have. If you fail to do this they may insure your property for you, at probably crap rates, and send you a bill.

Well worth it to just handle yourself, IMO. But there are a few things to be aware of.

carl spacklers hat said:

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I see it has already been posted but it needs to be reiterated. If possible, DO NOT ESCROW!. Taxes are due once a year, insurance once a year, so put those amounts aside, either monthly or all at once, preferably into an interest-bearing account, and pay your own way! While earning interest on your own money.

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I would caveat this to the extent there is an interest rate deduction on the mortgage contingent on escrowing. I got a quarter point reduction last time, as I recall. Also, the cost of escrow isn't as bad as it used to be, due to the changes in regulations. But, your sentiment against escrow is generally accurate (especially as consumer savings yields have gone up).

hph6203: Thanks for providing confirmation of the "tax-free loan" aspect of the escrow catch-up. I thought this was the case, but wanted someone in the know to weigh in. And while we have you here, what are the guidelines for discontinuing escrow once you have taken out the loan. Mortgage servicer discretion? Formula-based? Something else?

I bleed maroon said:

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carl spacklers hat said:

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I see it has already been posted but it needs to be reiterated. If possible, DO NOT ESCROW!. Taxes are due once a year, insurance once a year, so put those amounts aside, either monthly or all at once, preferably into an interest-bearing account, and pay your own way! While earning interest on your own money.

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And while we have you here, what are the guidelines for discontinuing escrow once you have taken out the loan. Mortgage servicer discretion? Formula-based? Something else?

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my company had a form with very clear criteria.



I'm sure some of these are federally mandated, while others are up to the mortgage company servicing the loan.

carl spacklers hat said:

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I see it has already been posted but it needs to be reiterated. If possible, DO NOT ESCROW!. Taxes are due once a year, insurance once a year, so put those amounts aside, either monthly or all at once, preferably into an interest-bearing account, and pay your own way! While earning interest on your own money.

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yep, can't believe i've gone this long without not only getting cc points for paying insurance, but getting interest on the money I set aside every month for taxes.

Now to find a high interest savings or checking account that doesn't require any sort of automatic/direct deposits.

any suggestions?

California properties were the only ones where the state required the servicer to remove escrow accounts under certain conditions the last time I worked our servicing side. It's been over a decade since then. Those requirements centered around pay history for the mortgage, taxes, insurance, LTV, loan investor, FHA wouldn't remove as an example. Other than that it was servicer discretion and as a general rule my company wouldn't permit the removal, which might've just been an easier response than "you can't remove it because your house is worth 25% of what you owe." Persistent borrowers occasionally managed to get it removed and other services were certainly more willing.

trip98 said:

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it's been about a decade since I dealt with escrow for mortgage....at that time the deal was they wanted at least 2 months worth of payments in reserve and could adjust to recoup if short one year and then increase for next. Basically a double whammy.

I simply set up another account and transfer money there every 2 weeks to cover homeowners, taxes, and HOA fees. When time comes for bills are due I have the money ready. Then usually sign up for some sort of CC to get rewards for paying a large bill I was going to pay already. Reevaluate at the start of every year to see if need to change the biweekly contribution.

Easy peasy....and if anything got me my 2 months of escrow the bank was making money on too

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"Then usually sign up for some sort of CC to get rewards for paying a large bill I was going to pay already. "

I use my SWA CC for every bill and I get enough airline points to go on vacation every year. Last year was Lake Placid and this you is going to be Ouray, CO in October.

Roundpoint adds a 2x multiplier to tax/ins increases to keep the escrow padded. It surprised me a few times when I got big increases. Then my servicer got changed to Freedom Mortgage, and in year 2 they dropped my monthly bill by a couple hundo, which was nice and totally unexpected.

My HOA and insurance don't charge fees
I think 2 of my 3 tax entities do
I only use when no fee

htxag09 said:

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Homeowners, yes. I could see some charging fees, though.

Our CAD, Harris County, charges a fee to pay taxes with a CC, think it's 2.5%. That info should be on yours' website.

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Brazos county charges 2.2% to pay taxes by credit card. I use my Chase Business Ink Card which pays 2.5% cash back on charges of $5000 or more, so I actually make 0.3% cash back paying my real estate taxes with a credit card this way.

it's possible there could be a shortage in your escrow account from the previous year. If your mortgage servicer didn't collect enough last year to cover taxes or insurance, they might adjust this year's payments to make up for that shortage. They should provide you with an escrow analysis statement that breaks down these changes and explains the new payment amount. It's also possible that they're padding the escrow to create a cushion for future payments, which lenders sometimes do to avoid shortfalls. This cushion is usually two months' worth of escrow payments. In terms of notification, mortgage servicers are generally required to send out an annual escrow analysis that details these changes. If you didn't receive one, or if the information isn't clear, I'd definitely reach out to your mortgage servicer and ask for a detailed breakdown of the increase. They should be able to explain how they calculated the new payment and address any errors if they've made a mistake.

Aggie71013 said:

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Can you stop escrowing? I didn't escrow and pay for tax and insurance out of pocket.

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insurance and taxes are how i max out credit card sign up bonus (then turn around and pay off the credit cards with cash). Insurance has always been same with credit card as eCheck but taxes sometimes have a small fee but its usually worth it hit the minimum spend on the credit card for the SUB.

Escrow is designed to cover insurance and property taxes, both of which have been increasing. It makes sense that escrow would increase.

update;
I removed escrow.

So my payment which they wanted to be $2900, is now only $1400 (P&I). They wanted a $2k+ min. in escrow, plus they were behind, so they were tacking on an extra $500 a month.

Insurance and taxes are $12k a year, or $1000/mo. Still only $2400, instead of what they wanted $2900.

However, my home insurance is paid through 5/2025, so I don't have to set aside any money for that for 9 months. Taxes are paid, and are due half in feb and half in may (about $3k each). Don't know why I didn't do this earlier. I can pay insurance monthly on a credit card. Taxes I can put in a 5% checking hopefully somewhere.

aggiebq03+ said:

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Don't go and do what you did before when escrowing, and have no idea at all what your property taxes and home insurance actually cost. Because this time you won't have the bank escrow department to front the money and then ask you to pay them back interest free, you'll need to borrow the money.

You were mad at the bank and escrowing, but the real problem was you didn't pay attention and know how much should have been going into escrow to begin with.

As long as you fixed the real problem, going without escrow is the right decision. And putting the money you need to pay in a money market or HYSA to get a little interest means you'll be a marginal amount ahead vs an interest free load to the bank for having them do a little math and write some checks on your behalf.

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Correct, because I thought the point of escrow was to not have to worry about it; that they are competent and can figure it out and let me know when I need to pay more.

Well they aren't and they can't.
Instead, they just fronted me money, and then, without raising my payment, took some of my normal payment to pay themselves back. So not only was my payment short for the increases, they were also taking some off the top to pay themselves back.. so fast forward 12 months, now I'm really short, and it goes up $500/month.
They aren't just fronting money, they also wanted a $2k pad, probably because they f-ed it up in the first place and had to front me.

I am more than capable of paying my tax bill. Even if I'm $1k short (It's only $6k to begin with), that isn't that big of a deal. I don't need to 'borrow money' for a few thousand bucks.

My insurance is paid month to month now (it was paid in full in escrow), and it's direct billed from USAA, so I will never be short there. Auto charge on credit card.