Don't Let Your Escrow Account Catch You by Surprise!
Do you know why your mortgage payment can go up even when you have a fixed-rate loan?
One reason may be your escrow account. Understanding how it works can help you avoid unexpected bills and increases in your monthly mortgage payment.
💡 What Is an Escrow Account?
Your mortgage company collects money each month to pay your property taxes and homeowners insurance. That money is held in an escrow account until the bills are due.
Instead of saving up to pay these bills yourself, you pay a portion each month through your mortgage payment. Most mortgage loans require an escrow account, although requirements vary.
⚠️ What Happens When There Isn't Enough Money?
Property taxes and insurance premiums can increase. When they do, your escrow account may not have enough money to cover the bills.
Your mortgage company may ask you to pay the shortage or spread it over future monthly payments. Your monthly mortgage payment may also increase to cover the higher costs going forward.
Don't ignore a notice about an escrow shortage. Review it and ask your mortgage company to explain any changes.
💰 Got an Escrow Refund? Don't Spend It Just Yet!
Getting money back can feel like a bonus, but an escrow refund doesn't always mean you have extra money to spend.
Your mortgage company may have collected more than needed for the past year. But if your property taxes or insurance premiums are increasing, you could face a higher mortgage payment later.
Before spending that refund, take these three steps:
- Call your mortgage company. Ask whether your escrow account has been reviewed and whether a payment increase is expected.
- Check your property taxes. Find out whether your current or upcoming tax bill is increasing.
- Check your homeowners insurance. Review your renewal notice to see whether your premium is going up.
Remember: A refund reflects your escrow account at a particular point in time. It doesn't guarantee your future expenses will stay the same.
✅ 3 Ways to Stay on Top of Your Escrow
1. Read Your Annual Escrow Statement
Your mortgage company sends a statement showing the money collected, bills paid, and whether your account has a shortage or surplus. Review it carefully.
2. Keep Track of Taxes and Insurance
Watch for changes to your property taxes and insurance premiums. These increases can affect your monthly payment.
3. Open Every Notice From Your Mortgage Company
Don't set these letters or emails aside. They may explain a payment increase, an escrow shortage, or a refund. If something doesn't make sense, call and ask questions.
🏠 The Bottom Line
Even with a fixed-rate mortgage, your total monthly payment can increase when property taxes or homeowners insurance costs go up.
Check your escrow account every year, pay attention to notices, and ask questions before a small change becomes a big surprise.
💬 Can't Get Answers From Your Mortgage Company?
If your mortgage company isn't giving you clear answers or you feel like you're getting the runaround, give me a call.
I'll help you understand what questions to ask and what information you need to get clarity.
The last thing you need to hear is:
"SURPRISE! YOUR MORTGAGE PAYMENT IS GOING UP!"
A little preparation today can help you avoid a financial headache tomorrow.
Gina M. Garcia, Realtor®
Your Real Estate Resource
San Antonio & Surrounding Areas
📞 210-274-7816
📧 [email protected]
🌐 GinaGarciaRealtor.com
Helping you make informed real estate decisions, long after closing.
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