Asking them to extend the shortage payments over 24 months instead of 12 months will only just pile up more debt year after year! Bcuz in our case, even after we pay the previous shortage in full, they turn right around and give us another notice of a shortage the next following year! The last time we paid $1,800, and the time before that was $1,500. It just keeps going up and up and it’s very frustrating. It’s enough to make you wanna start over and opt to just live in a tent. I’m tired of it. 😱
I agree. It could be a snowball, but sometimes people just need a little relief so they can buy time until income tax returns show up. There are other situations where it really makes sense, but I agree that this doesn't solve the problem at its source. Bottom line.. we need the laws to change
One of the things I wish I would've been informed of before buying a house to be prepared for. With inflation and gas prices shooting the roof, every dollar goes a long way. Unexpected rise in mortgage payments (no matter how small or large) can effect everyone in a different way. Luckily for me I can handle the increase, but frustrating and a little confusing nonetheless. Hopefully all realtors and brokers explain this to new home buyers who have no idea that this is even a common thing.
I live in FL and have an escrow shortage of $8704…. My mortgage went from $850 to $1150 in 2022. Now $1150 to $1824 in 2023. That’s 110% within 2 years. How tf are people surviving?!
trying to figure out how a 400 dollar increase in homeowners insurance equates to a 100.00 increase in my monthly house note. Also, I wish the homeowner had a choice as to whom their mortgage was sold to. I refuse to do business with Wells Fargo ever again.. but if my mortgage was suddenly sold to them,,, I would have no choice.
Great question. I'll give you a general idea on how its possible, but you'll have to translate it to your unique situation... If your homeowner's insurance increased by $400, then your escrow account was likely drained of all reserves causing an escrow shortage. Your mortgage company automatically sets up the shortage to be paid off using a 12 month payment plan... this increases your payment. At the same time, the new amount that needs to be collected each month to account for the new estimated increase in payment causes your payment to go up. At the same time, your lender is going to collect an additional 2-3 months of cushion to so to prevent a future escrow shortage. Your property value also increased which means your property taxes likely increased as well... All the same factors I mentioned above to compensate for the insurance increase/shortage now apply to your taxes, so the problem multiplies. There could be some other factors, but this would cover the bulk of it. On the bright side, if you purchased your house in the past few years you might be paying mortgage insurance (pmi) and the increase in value might allow you to get rid of it. When you check into this, you could also ask your mortgage co if you can pay out the escrow shortage over a 24mo period. I've got no solution for you to avoid Wells Fargo. You would just have to refinance. You could come close to guaranteeing that you never get sold there if you refinanced into a lender's "portfolio" loan program. You'd just have to scratch and claw to figure out your options on that.
Thank you for this I’m a new home owner and I was hit with escro shortage I have been so worried about this, I will call my mortgage company and ask for the 24 months extension . Thank you I feel better now
Our escrow account has a small shortage and did increase our house payment by a few dollars but years ago we were struggling to pay on time. The mortgage company stopped paying our property taxes and we've paid it ourselves in quarterly payments since that happened.
I've had a shortage every year since I purchased my home and even with paying the shortage in full, the mortgage company has increased my monthly payments for the coming year in 3 years I've gone from $1547.44 to $1619.28. I also successfully challenged my property tax last year(using your video), but I still had a shortage...It's very frustrating!
That is horrible. I’m so sorry to hear that. I wonder if you are still paying pmi? Here are a ton of other ideas: www.chandlercrouch.com/blog/options-if-you-cant-afford-your-house-payment/
Thank you for explaining this- as I sit up at night stressing about it. Waiting for my refund to come through to cover it. Easy come easy go I suppose 💸
Great video. I just found out that im negative in my escrow account. my mortgage payment was going to jump up $500 more with the default 12 month repayment plan. I called them and they are going to try and extend it to 60 months which will only be a difference of 25 dollars. Now I just have to figure out the best way to ensure this never happens again.
David, I wish there was a way to prevent this. Unfortunately, there's not much you can do. The best solution is just to protest your tax value and shop your insurance every year. Also, it might not hurt to save a few extra bucks each month in case your taxes and insurance increase dramatically so that you can pay the increase in a lump sum. Right now it seems costs of everything are going up.
I actually had an escrow surplus because 3 months back I sent extra $$ to my escrow to have extra cushion. Well, they sent me a check for $758 which sounds great but they still increased my monthly mortgage by $68. I'm guessing it is due to their estimate on higher home owners insurance coming up soon. I'm in FL. I believe that mortgage companies are supposed to refund you if they have a surplus of a certain amount in escrow but I'd prefer they keep the $758 as an extra cushion and leave my mortgage pymt as it was! Any advice on how to best use the $758? Principal pymt? Use it every month to cover the extra $68 towards the mortgage?
Put $$ into a high-saving rate CD or Money Market account and don't touch it. Next year if there's another escrow shortage you have the funds to cover it and hopefully, you earned some interest along the way.
I'm not sure if you answer these questions. But my shortage is 3000 they are not allowing me to pay that. They only will add it to the monthly payment. Is there a work around for this? I'm having the hardest time with them. I would so appreciate any feedback.
Hi Alexandra, I'm pretty sure they can't prevent you from paying off the entire amount, if that is what you want to do. Just be careful when sending in your payment to designate what you want your money applied to. They likely won't know if you want it applied to your monthly payment, principal, or escrow shortage without a little direction. It I were in your shoes, I'd probably just mail a check with the right kind of memo written on the check as well as a brief note attached that tells them how to apply the money. I would be shocked if that didn't work.
Is there a benefit of paying the shortage in a lump sum? Or does it end up being the same amount of money at the end of the year if they add it to the payment?
I was hoping to find a good answer for you, but I haven't been able to get my hands on a mortgage statement with an escrow shortage to personally take a look at it and verify first-hand. I actually don't think you will end up paying any more by paying it out in monthly installments. You are essentially borrowing money from the lender. If they don't charge you any more money to allow you to pay it out over 1-2 years, then it is an interest free loan. The only way to be sure is to take a look at your mortgage statement and verify.
it is an interest free loan, they are not allowed to charge you interest on the escrow shortage but in some states they have to pay interest periodically on the balance in your escrow account
My escrow storage was $263.58 and they spread the payments out for 60 months went I got the statement in the mail but I ending up paying the shortage so I'm waiting to see how much my mortgage will be now.
Its good, but too much is a problem. The lender is allowed to keep approx 2 months of cushion. This helps avoid an escrow shortage in a normal real estate market, but with double digit home value appreciation, it doesn't matter how much cushion they have, escrow shortages happen almost annually. People that are really disciplined with money would prefer no cushion so they can make interest on the money.
@@tammylovesmakeup you can't, just get your mortgage paid down to below about 80% loan to value and remove the escrow, then put the money into your own savings acct each month and make your taxes and ins payments yourself over the course of the year
I have a house in Tarant County that I bought last year and I’m a little concerned. My lender was switched over a few months ago and recently I’ve noticed my mortgage payments have decreased by $500. And my statement shows that I’m in a $5000 escrow surplus. Now I’m not complaining about lower monthly payments but my concern is that they’ll turn around and say I owe them or try to charge me more. I guess what I’m asking is, what’s the catch? I can’t imagine my escrow payments dropping so low and they not want that money back.
My biggest concern would be to figure out why your payment went down. Switching lenders shouldn't cause it to go down. Either your property taxes or insurance had to be decreased. If that's not the case then there may have been some sort of error. Your escrow account has a small amount of tolerance. If it has too much money beyond what they feel is tolerable, they're forced to send you the money via check. If you wanted to be on the safe side, you could just keep the money and set it to the side for a while. Most banks will allow you to open an additional checking account without any fees. Your taxes and insurance will inevitably increase. You could have the money set aside for when the time comes.
I did a refi in November and I just got a notice now in June that I have an escrow shortage. Nothing has gone up (property tax or insurance), my loan guy miscalculated. Is he at fault and is there anything I can do?
You paid less than you should have since November! It's like a free loan. Don't sweat it, the gov't needs their money. I know mine is going up because it was land only and now there's a house. Probably going to be hundreds added on.
@@globalfamily8172 my taxes are $16k and it only went up $11.00 so it’s not property taxes. The loan officer calculated wrong and if I had known I was going to be paying $700 more a month, I wouldn’t have done the refi in the first place.
Great question... The monthly payment you make is just an estimate. Sometimes the estimate is low. I'll explain... The actual tax bill is paid to the tax assessor out of your escrow account once a year. Your mortgage company uses the previous year's tax bill to estimate what the next year's tax bill might be. Next, they divide the tax bill into 12 equal payments. You pay 1/12th of the estimated future tax bill every month. The cash builds in your escrow account until the end of the year. If they did a good job estimating, by the end of the year you will have paid an amount equal to the entire tax bill. If, however, the tax bill shows up and the total tax bill is higher than the amount you paid in, then there is a shortage.
@@ChandlerCrouchRealtors Because I noticed that when they did the new escrow analysis the regular escrow is paid on the actual disbursements. And I am paying the monhtly payments based on that full years disbursement. Because my renewals are at the beginning of the year or end of the year.
Asking them to extend the shortage payments over 24 months instead of 12 months will only just pile up more debt year after year! Bcuz in our case, even after we pay the previous shortage in full, they turn right around and give us another notice of a shortage the next following year! The last time we paid $1,800, and the time before that was $1,500. It just keeps going up and up and it’s very frustrating. It’s enough to make you wanna start over and opt to just live in a tent. I’m tired of it. 😱
I agree. It could be a snowball, but sometimes people just need a little relief so they can buy time until income tax returns show up. There are other situations where it really makes sense, but I agree that this doesn't solve the problem at its source. Bottom line.. we need the laws to change
I have the same situation as you 😢
Did your property taxes and or homeowners insurance increase from one year to the next and how much
@@ChandlerCrouchRealtorsWhat laws apply to escrow shortages and what kind of changes can we lobby for?
One of the things I wish I would've been informed of before buying a house to be prepared for. With inflation and gas prices shooting the roof, every dollar goes a long way. Unexpected rise in mortgage payments (no matter how small or large) can effect everyone in a different way. Luckily for me I can handle the increase, but frustrating and a little confusing nonetheless. Hopefully all realtors and brokers explain this to new home buyers who have no idea that this is even a common thing.
Nope it wasn’t explained and I’m sick of my mortgage going up.
They wont, they only care about their commission.
I live in FL and have an escrow shortage of $8704…. My mortgage went from $850 to $1150 in 2022. Now $1150 to $1824 in 2023. That’s 110% within 2 years. How tf are people surviving?!
Damn man I was paying 1200 now I’m paying 1600
I just got hit with that letter 1,300 to 2,323
I just got hit from 1400 to 1800, very scary i don't know how they expect me to pay such a sudden spike, i may have to sell the house.
I’m on the same boat 🤬🤬
@@joebanda7140 me too 2400 to 3500
trying to figure out how a 400 dollar increase in homeowners insurance equates to a 100.00 increase in my monthly house note. Also, I wish the homeowner had a choice as to whom their mortgage was sold to. I refuse to do business with Wells Fargo ever again.. but if my mortgage was suddenly sold to them,,, I would have no choice.
Great question. I'll give you a general idea on how its possible, but you'll have to translate it to your unique situation... If your homeowner's insurance increased by $400, then your escrow account was likely drained of all reserves causing an escrow shortage. Your mortgage company automatically sets up the shortage to be paid off using a 12 month payment plan... this increases your payment. At the same time, the new amount that needs to be collected each month to account for the new estimated increase in payment causes your payment to go up. At the same time, your lender is going to collect an additional 2-3 months of cushion to so to prevent a future escrow shortage. Your property value also increased which means your property taxes likely increased as well... All the same factors I mentioned above to compensate for the insurance increase/shortage now apply to your taxes, so the problem multiplies.
There could be some other factors, but this would cover the bulk of it. On the bright side, if you purchased your house in the past few years you might be paying mortgage insurance (pmi) and the increase in value might allow you to get rid of it. When you check into this, you could also ask your mortgage co if you can pay out the escrow shortage over a 24mo period.
I've got no solution for you to avoid Wells Fargo. You would just have to refinance. You could come close to guaranteeing that you never get sold there if you refinanced into a lender's "portfolio" loan program. You'd just have to scratch and claw to figure out your options on that.
Thank you for this I’m a new home owner and I was hit with escro shortage I have been so worried about this, I will call my mortgage company and ask for the 24 months extension . Thank you I feel better now
Same situation I'm in I have a shortage of 5K increasing my payment by $746 more 😢 Were you able to get your situation fixed?
Our escrow account has a small shortage and did increase our house payment by a few dollars but years ago we were struggling to pay on time. The mortgage company stopped paying our property taxes and we've paid it ourselves in quarterly payments since that happened.
I've had a shortage every year since I purchased my home and even with paying the shortage in full, the mortgage company has increased my monthly payments for the coming year in 3 years I've gone from $1547.44 to $1619.28. I also successfully challenged my property tax last year(using your video), but I still had a shortage...It's very frustrating!
That is horrible. I’m so sorry to hear that. I wonder if you are still paying pmi? Here are a ton of other ideas: www.chandlercrouch.com/blog/options-if-you-cant-afford-your-house-payment/
My mortgage went up by $700 because of escrow shortage.
what did you end up doing?
My mortgage is now up by 1400 . Wtf . This is unreal. Where am I going to find an extra 1400 a month?
thats insane
Mine went from $2077 to $3200 that's ridiculous. I'm extremely frustrated. I'm not prepared for such increase.
Thank you for explaining this- as I sit up at night stressing about it. Waiting for my refund to come through to cover it. Easy come easy go I suppose 💸
Once again, offering tremendous value to property owners. Great video, Chandler.
4:11 LOL I’m with JP Morgan so that call would take like 25 minutes just to get with the right person
Great video. I just found out that im negative in my escrow account. my mortgage payment was going to jump up $500 more with the default 12 month repayment plan. I called them and they are going to try and extend it to 60 months which will only be a difference of 25 dollars. Now I just have to figure out the best way to ensure this never happens again.
David, I wish there was a way to prevent this. Unfortunately, there's not much you can do. The best solution is just to protest your tax value and shop your insurance every year. Also, it might not hurt to save a few extra bucks each month in case your taxes and insurance increase dramatically so that you can pay the increase in a lump sum. Right now it seems costs of everything are going up.
I actually had an escrow surplus because 3 months back I sent extra $$ to my escrow to have extra cushion. Well, they sent me a check for $758 which sounds great but they still increased my monthly mortgage by $68. I'm guessing it is due to their estimate on higher home owners insurance coming up soon. I'm in FL. I believe that mortgage companies are supposed to refund you if they have a surplus of a certain amount in escrow but I'd prefer they keep the $758 as an extra cushion and leave my mortgage pymt as it was! Any advice on how to best use the $758? Principal pymt? Use it every month to cover the extra $68 towards the mortgage?
Put $$ into a high-saving rate CD or Money Market account and don't touch it. Next year if there's another escrow shortage you have the funds to cover it and hopefully, you earned some interest along the way.
Thanks for the helpful advice.
I'm not sure if you answer these questions. But my shortage is 3000 they are not allowing me to pay that. They only will add it to the monthly payment. Is there a work around for this? I'm having the hardest time with them. I would so appreciate any feedback.
Hi Alexandra, I'm pretty sure they can't prevent you from paying off the entire amount, if that is what you want to do. Just be careful when sending in your payment to designate what you want your money applied to. They likely won't know if you want it applied to your monthly payment, principal, or escrow shortage without a little direction.
It I were in your shoes, I'd probably just mail a check with the right kind of memo written on the check as well as a brief note attached that tells them how to apply the money. I would be shocked if that didn't work.
@@ChandlerCrouchRealtors thank you still working on this. I appreciate your feedback.
Thanks didn’t know u can do that will call them now to ask
Is there a benefit of paying the shortage in a lump sum? Or does it end up being the same amount of money at the end of the year if they add it to the payment?
I was hoping to find a good answer for you, but I haven't been able to get my hands on a mortgage statement with an escrow shortage to personally take a look at it and verify first-hand. I actually don't think you will end up paying any more by paying it out in monthly installments. You are essentially borrowing money from the lender. If they don't charge you any more money to allow you to pay it out over 1-2 years, then it is an interest free loan. The only way to be sure is to take a look at your mortgage statement and verify.
it is an interest free loan, they are not allowed to charge you interest on the escrow shortage but in some states they have to pay interest periodically on the balance in your escrow account
My escrow storage was $263.58 and they spread the payments out for 60 months went I got the statement in the mail but I ending up paying the shortage so I'm waiting to see how much my mortgage will be now.
Awesome video. Thank you!
So my mortage went from 2600 to 2800 is this the new price of the loan
Do you pay interest on your escrow shortage?
no
What do you think about the lender requiring a cushion on the escrow
Its good, but too much is a problem. The lender is allowed to keep approx 2 months of cushion. This helps avoid an escrow shortage in a normal real estate market, but with double digit home value appreciation, it doesn't matter how much cushion they have, escrow shortages happen almost annually. People that are really disciplined with money would prefer no cushion so they can make interest on the money.
@@ChandlerCrouchRealtors How can I get rid of the cushion?
@@tammylovesmakeup you can't, just get your mortgage paid down to below about 80% loan to value and remove the escrow, then put the money into your own savings acct each month and make your taxes and ins payments yourself over the course of the year
HOW DO I GET TRUST FOR MY HOUSE.
I’ve filed them for my personal houses but unfortunately that is something an attorney would have to help you with.
So helpful Thanks x a million
I have a house in Tarant County that I bought last year and I’m a little concerned. My lender was switched over a few months ago and recently I’ve noticed my mortgage payments have decreased by $500. And my statement shows that I’m in a $5000 escrow surplus. Now I’m not complaining about lower monthly payments but my concern is that they’ll turn around and say I owe them or try to charge me more. I guess what I’m asking is, what’s the catch? I can’t imagine my escrow payments dropping so low and they not want that money back.
My biggest concern would be to figure out why your payment went down. Switching lenders shouldn't cause it to go down. Either your property taxes or insurance had to be decreased. If that's not the case then there may have been some sort of error. Your escrow account has a small amount of tolerance. If it has too much money beyond what they feel is tolerable, they're forced to send you the money via check. If you wanted to be on the safe side, you could just keep the money and set it to the side for a while. Most banks will allow you to open an additional checking account without any fees. Your taxes and insurance will inevitably increase. You could have the money set aside for when the time comes.
Good advice!
I did a refi in November and I just got a notice now in June that I have an escrow shortage. Nothing has gone up (property tax or insurance), my loan guy miscalculated. Is he at fault and is there anything I can do?
You paid less than you should have since November! It's like a free loan. Don't sweat it, the gov't needs their money. I know mine is going up because it was land only and now there's a house. Probably going to be hundreds added on.
@@globalfamily8172 my taxes are $16k and it only went up $11.00 so it’s not property taxes. The loan officer calculated wrong and if I had known I was going to be paying $700 more a month, I wouldn’t have done the refi in the first place.
How do I get in contact with you
Chandler@chandlercrouch.net
Why the heck would someone have a shortage if there is a regular escrow payment.
Great question... The monthly payment you make is just an estimate. Sometimes the estimate is low. I'll explain... The actual tax bill is paid to the tax assessor out of your escrow account once a year. Your mortgage company uses the previous year's tax bill to estimate what the next year's tax bill might be. Next, they divide the tax bill into 12 equal payments. You pay 1/12th of the estimated future tax bill every month. The cash builds in your escrow account until the end of the year. If they did a good job estimating, by the end of the year you will have paid an amount equal to the entire tax bill. If, however, the tax bill shows up and the total tax bill is higher than the amount you paid in, then there is a shortage.
@@ChandlerCrouchRealtors Is it possible to show you my escrow details
@@ChandlerCrouchRealtors Because I noticed that when they did the new escrow analysis the regular escrow is paid on the actual disbursements. And I am paying the monhtly payments based on that full years disbursement. Because my renewals are at the beginning of the year or end of the year.
On what number can I contact you, I need some help🙂
Hi Luis, happy to help. The best number is 817-928-4300