Don’t Let Your Escrow Analysis Spook You This Fall
There are plenty of things designed to scare you in October: haunted houses, horror movies, Halloween decorations.
Your mortgage statement probably shouldn’t be one of them.
For some homeowners, fall can bring a piece of mail that does cause a little panic: an escrow analysis showing that their monthly mortgage payment is changing.
Before you assume something has gone terribly wrong, know this: escrow changes are a normal part of homeownership. Once you understand what’s behind the change, they’re usually a lot less spooky.
First, What Is an Escrow Analysis?
If your property taxes and homeowners insurance are paid through your escrow account, a portion of your monthly mortgage payment is set aside to cover those expenses.
Periodically, your mortgage servicer reviews your escrow account to make sure enough money is being collected to pay those upcoming bills.
The important thing to remember is that property taxes and homeowners insurance premiums can change.
If either one goes up, the amount needed in your escrow account may go up, too. That can result in an increase to your total monthly mortgage payment, even though your mortgage itself hasn’t necessarily changed.
Why Does This Seem to Happen in the Fall?
Fall can be a common time for homeowners to start seeing escrow-related notices, particularly if they purchased or refinanced around the busy spring and summer homebuying season.
You may also receive updated property tax or homeowners insurance information around this time. If it has been about a year since you bought your home, your homeowners insurance premium may have changed since closing as well.
The result? A mailbox full of documents with numbers that may look a little different from what you remember. Which can be scary!
However, there are some things you should know when you buy a house so this doesn’t come as a scary surprise.
Getting an Insurance or Tax Bill? Don’t Ignore It.
Even if your property taxes and homeowners insurance are paid through escrow, it’s still a good idea to pay attention to the notices you receive.
Look at what changed from the previous year to keep track of your homeowners insurance premiums and property taxes.
Your insurance coverage is also worth reviewing at least once a year. Make sure you understand what you’re paying for, whether your coverage still fits your needs, and how a change in premium could affect your overall housing costs.
Homeownership comes with expenses that can change over time. Knowing what those expenses are doing helps you avoid being caught off guard.
When Your New Payment Looks REALLY Scary
A small adjustment is one thing. But what if you open your escrow analysis and see a payment change that makes you say, “Wait…WHAT?”
Don’t panic and don’t sit at home wondering what happened.
Take a closer look at the analysis and reach out with questions. A larger change could be related to property taxes, insurance premiums, an escrow shortage, or a combination of factors.
Understanding why your payment changed is the first step.
And if something doesn’t make sense, ask! Mortgage documents aren’t exactly known for being light reading, and there’s no reason you should have to decipher everything on your own.
The Least Scary Thing You Can Do? Pay Attention.
One of the best habits you can develop as a homeowner is simply staying aware of your housing expenses.
We want homeowners to understand their mortgage, not be afraid of it. If an escrow analysis or changing payment is taking you to a dark place this Halloween season, reach out to your loan officer. We’re always happy to help you make sense of what you’re seeing.