Submitted by [deleted] t3_10ppx0h in personalfinance
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Comments
BouncyEgg t1_j6lsge4 wrote
> My monthly payment went up $400 a month
So your previous payment was made up of escrow in addition to loan payment.
As in:
- Monthly payment = Loan payment + Escrow
So when your monthly payment went up by 400, you're paying the previous escrow amount and plus an additional 400.
So your calculation of:
- $400x12
is definitely not going to "add up to over $11,000" because you are missing the original escrow payments.
You should be doing:
- (Original Escrow payment + 400 ) * 12
That will be around the 11K.
MapsAndRivers t1_j6ltv79 wrote
My monthly escrow payment is about $940 a month so about $11,280 of just escrow. Including actual payment it’s about $20,400 a year. So is it correct? I’m sorry I’m so ignorant on this topic.
BlazinAzn38 t1_j6lu7d1 wrote
What was your escrow shortage last year in total? And what’s your tax and insurance look like for this year?
MapsAndRivers t1_j6lv8wj wrote
My taxes this year + insurance are about $5,500-$5,600 total. They told me my escrow shortage last year was $2,400.
DontEatConcrete t1_j6mxr1f wrote
Okay so you need $5600/12 and that’s your escrow payment. However you also need to catch up on that $2400.
If the lender lent you money (they do implicitly to cover the shortage), but you’re at 900+/month it seems they are requiring you pay back the overage over six (?) months instead of 12.
ShaneFerguson t1_j6mp6n8 wrote
>My brother in law got his house for almost $300,000 and our house payments are almost the same.
Your payments are determined by the original amount financed, the length of your mortgage, and the interest of the mortgage. If you pay your local taxes with your mortgage payment then that's another potential source difference between you and your BIL.
When did your BIL buy his house? Mortgage rates haber increased significantly. Current average rate on a 30 year fixed mortgage in the US is 6.43%. As recently as 2020 the same mortgage could be had for less than 3%.
And, of course, the length of the mortgage will make a significant difference in payment as well. Starting with the same principle your payments will be higher on a 15 year mortgage than on a 30 year mortgage.
Financing $300K at 3% for 30 years will cost $1265 per month.
Financing $175K at 6.43% over 15 years the monthly payment is $1518.
MapsAndRivers t1_j6mtvaj wrote
I know my BIL put about 5% down, 30 years, and like 4-5% rate. I got mine at $175,000, I also put about 5-7% down and I got it for 30 years at 3.125% rate.
GeorgeRetire t1_j6n795g wrote
Speak to someone at your lender.
Escrow is simply the estimated payments for your insurance and taxes. And it's adjusted annually after the actual insurance and tax bills are paid.
Each year, your lender sends you an explanation of the escrow distributions. That's where you saw the "escrow shortage" mentioned. If you think it's incorrect or if you don't understand it, you need to talk with them.
You are usually given the option to pay the escrow shortage in a one time lump sum, or pay it off gradually via a higher monthly payment. You have likely chosen the latter and are getting confused by that "extra" amount.
It's unlikely that you are paying too much. Talk to your lender and they will explain it to you.
Unable-Bat2953 t1_j6m7976 wrote
Wanted they notified you of the escrow shortage, they should have sent you a form that tells you how the new amount was calculated. If you have an online portal for your loan, check for letters and it should be there.
BoxingRaptor t1_j6mqebc wrote
> My brother in law got his house for almost $300,000 and our house payments are almost the same.
You can't use that as a comparison. What was the actual financed amount of his house? What is the rate on his mortgage? What are the property taxes like in his area? Does he have certain features in his home that would help lower the insurance premiums?
Your escrow amount will increase for 3 basic reasons:
You have an adjustable rate mortgage, and your rate went up (fairly rare these days).
Your property was reassessed, and your property taxes went up.
Your insurance premiums went up.
Or it could be a combination.
DirtyRugger17 t1_j6mqyvh wrote
Could also be OP isn't adding up everything they're paying out of escrow. Other potential costs are PMI and flood insurance
BoxingRaptor t1_j6mr52z wrote
Yep, fine point, those will certainly add to it as well.
MapsAndRivers t1_j6mu3cd wrote
I don’t have flood insurance but you know what I think you’re right. I’m not calculating PMI. I didn’t even think that it was included in escrow. I thought my payment was made of four parts: payment, interest, PMI, and escrow. I didn’t know PMI was added into escrow.
DirtyRugger17 t1_j6pgtst wrote
If you're sure you don't live in a flood plain fine, but they will buy it for you if you are. If you're not sure and think it may be possible I'd double check.
kveggie1 t1_j6mtc0u wrote
You should look at the statement you got from the mortgage processor.
They send you a detailed analysis of the escrow. They can make mistakes.
No need to sweat, do not compare to others.
m3003 t1_j6lsg7x wrote
They should have sent you an escrow statement breaking down how they came up with their numbers. If you don't have it, call them and ask for it. If their numbers are wildly off from what you think they should be then you need to talk to them and compare.