1. Escrow accounts can be helpful when it comes to “no more due dates”, but you still need to be very vigilant on your tax statements and make sure your escrow account is paying enough. When my parent’s property taxes went up last year, they received a notice from the county saying they were delinquent. It turned out the escrow account company didn’t realize the amount due went up, and shorted the county. As a result, my parents were on the hook for the late fees as well as the difference. Just be careful!

    • If the bill was part of the regular tax cycle then your parents should not have been on the hook for it. However, if it was an added assessment or supplemental bill that caused the increase then it is the homeowner’s responsibility to either notify the mortgage company to pay it or do it themselves.

      If it was the mortgage companies fault then I’d write a letter and asked to be reimbursed for the penalty.

      (My job is to pay property taxes from escrow.)

  2. Chris Gagner @ says:

    I’m 90% sure that we used an escrow account when paying our attorney’s fees. We put money into the account as we were able to save it, and the attorney took the money as payment once she had completed her services.

  3. The escrow account for my mortgage contains both a Shortage and a Reserve which adds about $7,500 beyond what the bank will payout for the coming year. The insurance and tax has already been set, so it seems to me that the bank is taking far more then is needed? Do I have any recourse to hold onto my own money?

    • How do you mean a shortage and a reserve?

      It does seem like that is a lot to be holding beyond your payment. Have you tried calling the bank to see what the situation is and why they are holding so much in your escrow? Could it be that taxes will be due soon and that money will me used for that? When taxes are due by us, the lump sum due is taken out of our escrow, at least for things like school taxes.

  4. If you pay extra per month going towards your excrow, will you get the surplus after taxes are paid? Or will it carry over to the next year? It can be a nice incentive @ the end of the year, especially if you always owe on state & federal taxes!

    • Ideally, I think you would only want what is needed to be put into escrow. Otherwise they are just holding the money for you when you could be holding it yourself and earning money on it.

      As for what the escrow company does with it, you would have to call up your company and ask them their policy for extra money.

      And keep in mind, the taxes paid through your mortgage escrow are different from your state and federal taxes. What gets paid are you local taxes. So if you always owe on state and federal then you can either adjust your withholding or put money aside in a fund to pay what you owe (though you should consult a tax pro to make sure you are paying what is required during the year).

  5. Judy Corey says:

    Can you escrow for taxes and homeowners or condo associations in the same account or must they be in seperate accounts?

  6. I am going to do an Fha streamline refinance, and my broker is asking for 13 months homeowner’s insurance and 8 months property taxes upfront to fund the new escrow. I thought the standard was 3 months, and I told him that. But he keeps telling me that they need to “pre-loan” the account. Are you familiar with this?

  7. Good post on a topic that confuses many home owners (and buyers). I would just add that ‘escrowing’ as we call it…for taxes and insurance is not required for conventional loans – although most lenders will punish you a little with higher fees if you don’t. Government loans (FHA) require that the borrower escrow for taxes and insurance…

  8. GLEN, I’m confuse with my home mortgaged escrow and how it determines my mortgage payment going up or down I want to know how to make it go down and stay down these mortgage companies are tricky and like you said you got to stay on them where can I go and learn more about my mortgage escrow and paying lower payments for my mortgaged.

  9. We are having the exact same problem. Our mortgage/escrow keeps going up. Our flood insurance went up, we did not want to have an increased mort/escrow pmt so we sent them a $900.00 check to put into the escrow. Now they want another $55.00 more amonth to cover a two year escrow acct. This doesn’t make sense. I am prepared to have my own “escrow account” just as I have a separate mortgage account. Instead of paying the bank, I will make the payments. CAN I DO THIS?? not getting anywhere on this automated phone system and the people I talked to were not helpful…

What Do You Think?