Escrow Analysis Questions

[EaglesFan2006]

My MC is running my first escrow analysis in the next week, which would change my potential payment starting on 11/1.  

I have a couple of questions so that I understand better what to expect:

1) Is there a good tool out there to estimate what to expect, like a template or calculator?

2) My property taxes increased $24, and my homeowners decreased by $132.  Is it reasonable to expect my monthly payment to dip slightly?  It's a little confusing since I paid part of taxes and last year's premium at closing.  Additionally, I paid an extra  $50 toward escrow

3) Since they're running this before I pay my mortgage on 10/1 to impact the new payment on 11/1, would my escrow payment on 10/1 be reflected in the starting balance?

4) In trying to estimate a surplus/shortage, am I on the right track here:

-Multiply my current escrow payment by 12

-subtract 12 payments for MIP, all equal

-subtract 4 payments for Taxes (as they're paid quarterly)

-subtract 1 insurance premium, which would be paid next year (understanding that the taxes and insurance will likely change a bit some time next year)

In following this method, where I add all the expenses for the year and divide by 12, it looks like it's more than what i'm paying monthly into escrow now, which i'm confused since my insurance decrease is more than my tax increase...I feel like the payment should be close to the same, so i'm wondering if i'm missing something, or if it has something to do with the escrow cushion.

[kilroy8]

Yes, they have a minimum allowed balance and that trips things up. Sounds like you can expect the about same as you had, provided you didn't have a shortage.

[EaglesFan2006]

---

@kilroy8 wrote:

Yes, they have a minimum allowed balance and that trips things up. Sounds like you can expect the about same as you had, provided you didn't have a shortage.

---

Thanks,

so I'm trying to figure out if I have a shortage or not...the minimum is twice the monthly payment right?  So in my case it would definitely matter if they're 'anticipating' adding in the escrow payment I'll make on 10/1 into my starting balance.   Is a shortage basically that if any month ends with a balance below my minimum, I would owe the difference?  What if htey pay my taxes due in November on Say October 26th...I know they paid the taxes due in August on July 26th/

I guess I'm struggling to understand how I could not only owe money and have a higher monthly payment when my insurance/tax payments decreased by about $100...

[JVille]

They typically divide by 11 not 12 in anticipation of an increase in the following year. Loan Servicers is limited by an Exact Forumula to make these calculations. Based on what you are saying your payment will either stay the same or change slightly.
Don’t stress about it, sounds like the nightmare stories your friends tell you won’t be happening to you!

Note: the rule used to be and I think still is that the Servicer can have 1 extra payment in your account over and above what is needed to cover anticipated taxes, Ins, PMI.

[EaglesFan2006]

---

@JVille wrote:
They typically divide by 11 not 12 in anticipation of an increase in the following year. Loan Servicers is limited by an Exact Forumula to make these calculations. Based on what you are saying your payment will either stay the same or change slightly.
Don’t stress about it, sounds like the nightmare stories your friends tell you won’t be happening to you!

Note: the rule used to be and I think still is that the Servicer can have 1 extra payment in your account over and above what is needed to cover anticipated taxes, Ins, PMI.

---

aye, even worse...so it seems impossible to not owe haha

[JVille]

In your case I think you are worrying too much. Generally you have an option to take the higher pmt OR send them the $$ they claim they will be short. But you seem to be just on the line of nothing happening at all. Don’t stress it!

[EaglesFan2006]

---

@JVille wrote:
In your case I think you are worrying too much. Generally you have an option to take the higher pmt OR send them the $$ they claim they will be short. But you seem to be just on the line of nothing happening at all. Don’t stress it!

---

Thanks.  i'm not really stressing per se, I mean it is what it is.  I'm an avid budgeter so I'm trying to figure out the worst case haha.  It's just odd to me that no matter how many times I run the numbers, it looks like my monthly escrow increases $50 even though my Taxes/Insurance went down.  I'm sure there's something i'm doing wrong, or i'm not figuring out the starting balance correctly, or something.  I guess I will find out soon enough.

Thanks for the help!

[JVille]

Let us know it always interesting to hear the outcome and we rarely do!

[Anonymous]

---

@JVille wrote:
They typically divide by 11 not 12 in anticipation of an increase in the following year. Loan Servicers is limited by an Exact Forumula to make these calculations. Based on what you are saying your payment will either stay the same or change slightly.
Don’t stress about it, sounds like the nightmare stories your friends tell you won’t be happening to you!

Note: the rule used to be and I think still is that the Servicer can have 1 extra payment in your account over and above what is needed to cover anticipated taxes, Ins, PMI.

---

At one time it was 10% of the Escrow Balance annualized but, that was a long time ago so interesting what you posted!

[EaglesFan2006]

I believe they hold 1/6 of the annual cost of taxes and insurance (not counting MIP or PMI).

I’ll post once I get the result but sure looks like my payment is going up 50-75 per month despite the decrease