Hello,
I bought my new home a year ago this month. In March I logged in to pay my mortgage payment and saw that my mortgage payment had went down by almost $500 a month. At first I was really confused since this is my first mortgage and I had only ever heard of them going up in payment amounts never lowering them. So I called the mortgage company and they explained in Feburary and August they go through accounts and readjust payments based on actual taxes paid not the estimated tax amounts I was paying since I bought the house since the house was brand new when I bought it they had figured and estimated property tax payment. I had also paid an 6 month extra advance escrow payment when I bought the house.
So in Febuary when they reviewed my mortgage I had a good sized overage. Since I had not had my mortgage for a year they took that over payment and put it back in my escrow account and I am still sitting on an overage. Since then I have filed homested exemption on my home and because I have a disability I will get an extra deduction on my property tax which could possibly give me more overage in my escrow. I also re negotiated my homeowners insurance this year and dropped the bill by $300 a year. Which again will give me more money (I think) in escrow,
I spoke with the mortgage company again to just verify that they will again be reviewing my mortgage payment in August and she verified that since I now have had the mortgage over a year they will be issueing me a check for overage amount and the difference in my homeowners insurance payment. She advised that when I get the check that I should just take it and deposit it back in my escrow account once I cash the check incase my tax amount changes or homeowners go up at a later time I will have that buffer.
Why would I want to do this? Wouldn't it make more sense for me to put that overage in my savings account or a seperate savings account and gain some interest on it rather than giving it back to them? I mean I only earn 1.20% interest but it is better than nothing. I'd rather myself earn it than giving it to them. I guess I could see for people who might spend it rather than saving it for later but is that what people usually do is roll it back into their escrow accounts.
What would you do? roll it back in or put it in savings and keep it there incase you need to use it for a shortage later?
Thank you for taking the time to read this.
My mortage escrow has gone in both directions over the last 6 years. Some years it has
fallen slightly behind and requires a small true up contribution at property tax time and it
has had excess funds returned a couple years. Yours may be similar. It is understandable
that the mortagage company is only making an estimate and it probably won't ever be right
on the money.
I would take the the check and put it where ever you keep your "emergency fund". It doesn't make
much sense to over contribute to the escrow account. Just be aware that over the life of the mortgage
there are likely to be years where the escrow runs short and requires an unscheduled payment.
It's nice when you get an unexpected refund, but it is going to work both ways over the years you
have the mortgage.
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