How to Lower Your Monthly Escrow Payment | Matic (2024)

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How to Lower Your Monthly Escrow Payment | Matic (1)By Matic

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If your mortgage company is collecting too much for your homeowners insurance, you may be able to request a reevaluation of your escrow account. A decrease in your monthly escrow amount would end up decreasing your total monthly mortgage payment.

Here’s what to do:

1. Check your latest mortgage statement to verify the monthly premium for your homeowners insurance.

2. Multiply the monthly premium amount by 12 and compare with your latest insurance bill.

3. If your lender is required to keep 2 months of cushion, then divide your total insurance bill by 12 and then multiply that amount by 14 to see the maximum amount that your lender could escrow. Now, divide that by 12 again to get your monthly insurance premium.

If there is a significant difference in your favor, you may want to request your lender reevaluate your monthly escrow payment.

Like anything else, there are pros and cons to paying your homeowners insurance through an escrow account. Learn more here »

How to request your analysis:

1. Make sure you have all of the supporting documents needed to validate your request. If you don’t have a copy of your current policy or latest bill, contact Matic or your insurance carrier for a copy.

2. Once you have all of your evidence, contact your lender and request a new Escrow Analysis. Requests for reevaluation are best to do in writing, along with sending in copies of your insurance bill or any other documents.

3. Some lenders may be able to accept requests electronically. Check with your lender on the fastest and most efficient way to submit.

Keep in mind that there is no guarantee that your request will result in a reevaluation. The more evidence you have that shows you’re currently overpaying into escrow, the better chance you’ll have of getting it formally reevaluated.

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This Blog/Vlog/Website is made available by Matic Insurance Services, Inc. for educational and informational purposes only. Matic makes no representation or warranty of any kind, express or implied, concerning the accuracy, completeness, or suitability of the information contained herein. Insurance products and services described may not be offered in all states. Eligibility for insurance will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time. A Matic Insurance Agent can offer you practical guidance and answer questions you may have before you buy.

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How to Lower Your Monthly Escrow Payment | Matic (2024)

FAQs

How to Lower Your Monthly Escrow Payment | Matic? ›

If your mortgage company is collecting too much for your homeowners insurance, you may be able to request a reevaluation of your escrow account. A decrease in your monthly escrow amount would end up decreasing your total monthly mortgage payment.

Why is my escrow payment so high? ›

Escrow payments usually go up due to increasing insurance costs or taxes. If you opt to add an escrow account later in your mortgage term, it may involve additional fees to set up and manage the account. Fortunately, the cost to set up and manage the account shouldn't exceed one-sixth of your annual escrow payments.

Can I pay down my escrow balance? ›

Should I pay off my escrow balance? While you may have the option to pay down the principal balance on your mortgage, you do not have the same option when it comes to your escrow account. Homeowners should know that any surplus escrow funds will simply be added to the account by your lender.

Can I pay my escrow shortage online? ›

If it's higher than projected, you can make an additional escrow payment online to help lower or prevent a shortage.

Is it better to pay off escrow shortage? ›

By paying your escrow shortage in full, you may have peace of mind that you eliminated the shortage and brought your escrow account back into balance.

Why did my escrow go up $400? ›

If your home value has risen since the prior year, the cost of your taxes and insurance will also increase. Thus, the entity that holds your mortgage will hike up your escrow to ensure your monthly payment can cover those higher bills.

What causes escrow to go down? ›

Escrow shortages can occur when trying to estimate the taxes due in the coming year or predict changes in insurance premiums. Your mortgage lender is responsible for estimating these amounts, as they manage your escrow account. Sometimes these amounts are overestimated, resulting in an escrow refund.

Why did my escrow go up $1000? ›

Escrow Changes

When your property taxes and/or homeowners insurance increase, so will the amount that's needed in escrow. Local taxing authorities assess property values for tax purposes at different times.

Is it normal for escrow to increase every year? ›

Your monthly mortgage payment is made up of three parts: principal, interest, and escrow. Your principal and interest are likely on a fixed rate and won't change. Your escrow payments, however, will likely vary on a yearly basis. An increase in your escrow payments could be due to tax and insurance rate fluctuations.

What happens if I pay my escrow in full? ›

On or after the effective date of the escrow analysis: If paid in full on or after this date, the shortage amount is removed from future monthly payments.

How do I stop my escrow from going up? ›

Refinance or modify your mortgage. If you can refinance your mortgage to a lower interest rate, then you can lower your overall mortgage payment — potentially offsetting a larger escrow account balance requirement. You can also use refinancing or modification as a means of extending your loan term.

How do I get out of escrow? ›

In some cases, you might be able to cancel an existing escrow account, though every lender has different terms for removing one. Sometimes, the loan must be at least one year old with no late payments. Another requirement might be that no taxes or insurance payments are due within the next 30 days.

Can you dispute escrow shortage? ›

The appeal process is noted on your tax bill notifications you receive in the mail. You'd be surprised at how many homeowners are successful with an appeal. Unfortunately, there isn't much that can be done about an escrow shortage when it happens.

Why did my mortgage go up $300 dollars? ›

A higher monthly mortgage payment doesn't necessarily mean you've done anything wrong. Mortgage payments can change even when the homeowner pays on time. Changes in your escrow account, property taxes, homeowners insurance or interest rate can increase the dollar amount of your mortgage loan payment.

How can I lower my mortgage payment? ›

You may be able to lower your mortgage payment by refinancing to a lower interest rate, eliminating your mortgage insurance, lengthening your loan term, shopping around for a better homeowners insurance rate or appealing your property taxes.

What is a good amount to put in escrow? ›

How much you'll have to pay in earnest money varies, but it's usually about 1% – 2% of your home's final purchase price. If you've agreed to pay $300,000 for your new home, you'll typically have to deposit $3,000 – $6,000 in earnest money into an escrow account.

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