I do not understand why my escrow account went up over $100 a month for 12 months. All I know is that I try to pay my bills on time. This increase constitutes at least a week or two of groceries and has me anxiously feeling more pressed for cash than I already am...
Basic nuts and bolts of situation are below the fold.
I have a single loan mortgage with a 5.625% fixed interest rate. My principal and interest amount due each month is $831.
In 2009, my property taxes were $2,295 and homeowners insurance was 1,860. This resulted in a $305 monthly escrow charge and a $1,135 monthly payment to the mortgage company.
As of today, my property taxes for 2010 are projected to be $2,015 and homeowners insurance is $1,835. I got off the phone with the mortgage company and they said my escrow account went up to $412 a month. My total monthly payment is now $1,243 (up from $1,135).
HUH?
For some reason this doesn't make sense to me. Simplisticly speaking, it seems that the difference between my 2009 and 2010 escrow accounts is (2009 property taxes + 2009 HOI) – (2010 property taxes + 2010 HOI) or 4,155 – 3,850 = -305. This logic would cause my current escrow expense to go down. Should I be looking at my 2008 & 2009 numbers?
I asked her to walk me through it. She started going over the monthly positive and negative balances in the escrow account throughout 2009 and 2010 (all I could hear was the sounds of Charlie Brown’s teacher). It didn’t make sense to me, and a brief internet search describes a Real Estate Settlement Procedures Act that requires a mortgage company to refund balance differences to the customer. Would this act not prevent the positive and negative balances of which the mortgage rep spoke of? I asked how I could prevent such a fluctuation in the future. She said there is no way, but that it would probably work itself out in 12 months.
I apologize for the "woe is me" diary, especially since my woe is trivial compared to other things going on in the world. But I like to understand what it is I’m actually paying for when I pay my bills, and this $100 increase is frustrating. I figure there are plenty of bright people on this site that may be able to offer me some insight or guidance on this situation.
Thanks in advance!