62strat said:

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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.

• It's formulaic, bro - - they are required by regulations to do it the way they did it. No one screwed up here (you or "them"), it just happens when taxes and insurance rates escalate quickly

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.

• In effect, it's an interest free loan they were giving you. You got mad, and cheated yourself out of a 0% interest loan. Ideally, you would discontinue escrow AFTER you finished receiving this unforeseen benefit in a year or so. Not a big deal (maybe a hundred of so of lost money-market interest?), and it's better escrowing yourself, so you're in the right spot going forward.

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.

• Incidentally, you're actually probably cheating yourself just a little bit here, too. Check with USAA and see what the semi-annual or annual insurance cost is. Do the math. With State Farm, it's several dollars a month for the privilege of paying monthly.

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See comments above. I will say "thanks" to you for mentioning credit card payments for insurance. State Farm didn't allow it last time I checked, but now it turns out I can do that - you saved me money - THANKS!

I think they did screw up. The way I see what happened, after looking through old escrow statements;

They fronted me money last May to cover a larger than expected insurance and/or tax bill, it was like $2k, so they want $166 a month back. That alone should trigger a payment increase. But, you would think there would have been two raises at that point.. one raise $166 to pay themselves back, and another raise to cover the new future larger bill, call it $166 as well, minimum.

But instead, they kept payment the same (total escrow payment was $1000), and they took the $166 of my $1000 to pay themselves back. So now I'm only actually paying $834 to escrow .. a double whammy.. that can't even pay the OLD bill amount, let alone the NEW higher insurance/tax bill..

So all of a sudden my payment needs to go up $500 to $1500. It should have added $250 last year, and $250 now.

That can't be the right way to do it. That has to be a screw up.

USAA doesn't charge more for monthly hazard insurance (or auto for that matter) payments.


On top of all this, I look at my current hazard premium and tax bills, and they are $12k total. So there is no reason they need $1500/mo to cover it in the first place. They just want to pad their accounts and rake in the interest, which is BS.

It was a screw up. What should have happened:

• You realize the amount in escrow didn't cover what they paid.
  
• You write a check to the bank to put money in escrow to cover shortage.
  
• You keep any extra they didn't increase if you suspect further increases that weren't accounted for, or future ones for the coming year, in a savings account to write another check.

Or do what you are doing and go without escrow which is a cleaner solution.

Escrowing isn't to help the mortgage lendee.
It's to protect the mortgage lender and make sure insurance and taxes are paid on the property that is collateral for the loan. So Mother Nature and Uncle Sam don't try to butt in ahead of them in line for repayment.

Someone screwed up but it wasn't who you think.

You're going to owe it whether it's escrowed or not. Typically, high loan-to-value mortgages are going to require escrow. Bank doesn't want to wake up two years from now and find out that tax is past due and insurance isn't being paid. Lower loan-to-value loans carry less risk on the tax component.

As a previous poster noted, if your escrow was underfunded last year, the mortgage company can increase your escrow to cover that shortage and cover current increases. You can call the services of your mortgage to get an explanation of the other component of the increase. Insurance has increases dramatically. Property taxes have increased in line with property values during Biden's inflation economy. My guess is you were underfunded from last year and they've added in a make-up amount.

You should have received an escrow analysis in the fairly recent past that will detail the changes.