Why Did My Escrow Payment Change?

If you’re looking for more general information about how your escrow account works, read this article: What is Escrow?

Why Did My Escrow Payment Increase?

Here are some of the most typical reasons your escrow payment has gone up:

• Property Taxes or Insurance Premiums Changed
  This is the most common reason for an escrow increase. If taxes or insurance costs rise, the amount in your escrow account will have to adjust to cover those costs.
• Escrow Shortage
  Newrez performs an escrow analysis annually, and when this review occurs depends on the state where the property is located. (You may also request an escrow analysis at any time.) If we find there isn’t enough money in your escrow account to cover expenses, the monthly payment might need to be adjusted to make up for the shortfall.

Why Would My Escrow Account Have a Shortage?

We maintain a cushion in your account of generally no more than 2 payments to cover cost fluctuations. However, certain factors can result in a shortage:

• Unexpected Cost Increases
  Our escrow analysis depends on estimates of the coming year’s taxes. We try to be as accurate as possible, but sometimes taxes are steeper than anticipated.
• Due Date Changes
  A shift in the due date of your tax or insurance bill can impact your escrow balance.

Could My Escrow Payment Decrease?

Your escrow payment could decrease as a result of an escrow analysis, though this is less common than an increase, based on current trends for property taxes and homeowner’s insurance costs.

Sometimes we determine your escrow account has a surplus of funds in it, beyond the typical “cushion” amount we keep for emergencies. If your account carries a surplus in excess of $50 and your payments are current, we will mail you a check for the surplus amount along with your escrow analysis.

What Should I Do If My Payment Changes?

That depends on your payment method:

• Autodraft Users: No action is needed. We will automatically adjust your drafted payment amount. Make sure enough money is in your checking account before we withdraw funds each month. (For more information about the convenience of autodraft, read this article.)
• Online Bill Pay Users: Update your payment settings to reflect the new amount effective the same date the payment change will take effect on your loan.
• Check or Money Order Users: Make sure your payment reflects the new amount and mail it so it arrives before the due date.

What If There’s an Error in My Escrow Account?

Errors are uncommon, but they can occur. If you think there’s a mistake with your account, submit an inquiry through the Contact Us page. We’ll review your escrow account and correct any errors.

How Can I Prepare for Future Escrow Changes?

Avoid surprises and adapt to escrow fluctuations with these steps:

• Monitor Property Tax Assessments
  Keep an eye on local tax rates and dispute any inaccuracies of your property value.
• Review Your Insurance Policy
  Shop around and compare rates and coverage options to make sure you aren’t overpaying.
• Build an Emergency Fund
  Keeping a just-in-case fund may help absorb unexpected increases.
• Request an Escrow Analysis
  If you anticipate changes, ask for an escrow review to better prepare.

Stay On Top of Homeownership Expenses

Escrow adjustments are a normal part of homeownership. Planning ahead can make it easier to manage your mortgage payments. If you have questions, peruse our Frequently Asked Questions page or contact us through our online chat function for assistance.

When was the last time you had a review of your mortgage? Find out if a refinance^† could help you better achieve your financial goals. A mortgage checkup is quick, obligation-free and doesn’t cost you anything. Reach out to a mortgage expert today.