Ask Sid: Resisting Mortgage Escrow Payment Hikes - AARP Bulletin Scams & Fraud

Must I Increase My Mortgage Escrow Payment

Maybe not

Q. My mortgage company recently increased my monthly payment, blaming a “requirement” for additional escrow. Yet that escrow hike far exceeds the upcoming increase in my property taxes, so why should I pay it? A. Perhaps you shouldn’t. The federal Real Estate Settlement Procedures Act allows—but does not require—mortgage companies to increase escrow reserves as a cushion against future hikes in property taxes and homeowner’s insurance. But that cushion shouldn’t exceed one-sixth of the total amount paid out from escrow each year, or about two months of escrow payments. If it does, you should ask for a new statement, while providing proof that the escrow increase is beyond what your new tax bill would require. You may be able to avoid escrow altogether, paying your own property taxes and insurance, if the outstanding loan amount is less than 80 percent of the appraised value of the home. Cancel You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits. Your email address is now confirmed. You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age. You can also by updating your account at anytime. You will be asked to register or log in. Cancel Offer Details Disclosures

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