1. Your projected property taxes increased
Your servicer estimates the property-tax bills it expects to pay from your escrow account. If that annual estimate rises by $1,200, the ongoing monthly escrow requirement generally rises by about $100 before any shortage payment.
2. Your homeowners insurance premium increased
Insurance is another common escrow disbursement. A $600 increase in the annual premium is about $50 per month when spread across a year. Check the premium on the escrow notice against the renewal from your insurer.
3. Your account has an escrow shortage
A shortage means the projected account balance fell below the required target. A servicer may collect that shortage over time. A $1,200 shortage spread across 12 months adds $100 per month temporarily, on top of the new ongoing escrow.
Important distinction: the new tax and insurance amount may continue, while a shortage repayment normally ends after its stated repayment period.
What to compare on your notice
- Previous and projected annual property taxes
- Previous and projected annual insurance premiums
- The stated shortage and repayment period
- The old and new monthly escrow amounts
- The old and new total mortgage payments
What to do after finding the cause
- Tax increase: verify the bill, assessment, exemptions, and local deadlines.
- Insurance increase: compare the renewal with equivalent-coverage quotes.
- Shortage: compare paying upfront with the stated repayment schedule.
- Unexplained difference: ask for a line-by-line explanation from the servicer.