First time homeowner and I was stressed to see my new monthly payment. I'm glad I found this video because your explanation of the escrow account and what not made sense, Thank you!
You have no clue how much you’ve helped me. I’m a conversion specialist to convert construction loans to permanent financing, and the amount of my borrowers that I have that blow up my work phone, cursing me out about the collections in their escrow account, is crazy. I mainly came here to figure out the calculation due from the “number of months” collected specifically for property taxes outside of 2 month cushion, & outside of that, I found so much more info that took a ton of relief off of my shoulder. Not that I didn’t know what I was doing…. But the explaining part can be more complicated then it seems… even when u know what ur doing….
Matt - I stumbled upon your video today because my wife and I are closing on the home soon but this whole prepaid vs escrow just didn’t make sense. I spoke with the lender and they explained it fine but later I got confused as explaining to my wife. Now after watching your video, I totally Understand it. Thank you so much for explaining it well! Thanks for clarifying all our confusion :)
By the way, thank you for the video, very well explained . I appreciate the information you e provided very very much. Sometimes if not all times I find UA-cam videos much more helpful than calling people or asking other home owners.
I love looking at my loan, escrow acct. I do work with my company and call them Mr. Cooper Co. . I do pay extra on my principle. the good thing about Mr. Cooper on my acct I can pay extra in escrow and principle if I want to when I want to, Also I can go and adjust my monthly mortgage payment with added escrow and or escrow. as I can also see what bills cost will be on home insurance and county taxes and make sure I have the money to pay them.
That’s great Don! Mr Cooper has a great application and does good with servicing. I’ve got 2 loans serviced by them and others with UWM and HomePoint. To get the loan originated you know where to go 😉➡️ greatmortgagebroker.com
I'm so glad it helped. I really enjoy making videos and appreciate you taking the time to let me know it was useful. If you have other questions you'd like me to answer in a video let me know, I am happy to help.
So I have a question I’m closing on a house on November 28, 2022 and lender has at closing cost 12 months of taxes and also 2 months of reserves. I know the example you showed closing was in june and 12 months of taxes were charged. But since I’m closing end of November is that accurate for lender to include in taxes 12 months at closing? I really appreciate your feedback on this
thank you man for you help i just got it with an extra on my escrow i was lost 😞 but now you make it crystal clear for me. now i have one question 🙋 will this escrow ride off after a while or it will remain for life of the mortgage ?
Some lenders send videos if theirs an escrow shortage if payment changes the following year keep in mind taxes or insurance may have gone up lenders should be sending a detailed analysis I work for a mortgage company and man having to go over escrow 😐😒 at closing they don’t tell customers payment may change principal and interest stay the same but escrow changes may increase your payment
Just caught the end of your live and wasn't able to get my question in. I just bought a new home and did not elect for an escrow account. How does supplimental property tax affect me if I don't have an escrow account. Does it affect me at all? Thanks in advanced.
Just got hooked on watching your videos, the info. and your ability to break it down is invaluable! I did have a question though. Is it ever possible to eliminate an Escrow Account when getting a mortgage? I'm asking because I hate thinking they are keeping a (%) of my $$ as a buffer each month. Case in point, I an currently going through a ReFi and have had to inform my mortgage Co. that my property taxes have gone down, already a sore spot that I should have to do their leg work. And I should... 1) Have a Lower Mortgage Payment. 2) Am entitled to a refund of a portion of my escrow account. And I do not know when I will be seeing either, yet.
When you refi do the new loan without escrows. Totally up to you. More work to pay county and ins company on your own but no funds held in reserve (they pay you interest though 😁)
Thank you for this! If your home value increases therefore your property taxes increase, would that new valuation of your home count toward your equity and be able to help you get rid of your PMI?
I closed a couple months ago and got a builders risk policy while I made some necessary renovations. Now I'm trying to get an H03 policy thru a different company, but the escrow account doesn't have quite enough for the new premium. I guess I can't cancel the old policy until the new one is in place (and get the refund). Is it worth it for me to put more money in escrow to cover that, or just pay out of pocket for the full amount or the difference?
so my question is when i refid lastt year they sent me a check for the escrow overage and i cashed and put it right back into the escrow. a week ago i saw my payment went up 25$ a month and called. i had a surplus in my escrow, they sent me a check for the remainder of the surplus and my monthly"taxes" went up 25$ a month they said. i believe they sent the check before they reevaled the taxes so they can put the taxes on the loan and make interest off of it am i wrong?
Would you recommend not putting money in an Escrow to lower closing costs or would you take that as a sign that it might not be the right time to buy and save up some more $$ to close with Escrows.
Thats a good question Juan and I think your intuition is right about a sign. If you don't have the $3k-$4k required to set up an escrow account buying a home could be a bad idea. First off you'll have to save up to pay the taxes and insurance seperate and imagine if a repair costing $4k+ came up ? You'd be in a terrible position. My gut says wait and do it when you have money to set up the escrow account AND a few months of reserves in the bank. Thanks for watching!
soo idk if you are still paying attention too this thread but i was wondering my lender im getting ready to close on a loan. i seen the paper work and it said remaining to close is 2843 and the lender keeps letting me i need 3984. i did not know that i was going to be put through escrow its a fha loan but my question is will this be calculated in with closing ?
Trucking companies are doing this through “Lease purchase programs “ and they are ripping drivers off. The difference is that the escrow accumulated doesn’t go towards taxes , but instead they are saying that it is an “average service amount “ that goes towards repairs which basically puts all drivers in a “pool” regarding escrow saying that each drivers maintenance bills over the course of a year averages out to the same. I totally disagree with that philosophy seeing that each truck will occur different issues and it’s not my responsibility to assist using my accumulated escrow to help within another drivers repairs. If I paid 10k in escrow for the year and my total repairs for that year totaled $2000 then where is my $8000 going??? That money should be reimbursed or put towards my taxes 1099
Thanks for your vedio! My question is that I sold my property at the end of last year (2021), was the escrow account closed automatically during the closing process? I believe I still have some money in there and I do not see any form of refund. So I'm confused.
you did a great job explaining this..i understand how it works now..do you know if veterans get reimbursed property taxes if during that year they became total and permanent disabled which means prooerty taxes are omitted
Hey matt this video was very expla natory but i was wondering what if i take out my escrow and just put that money in a mutual fund? It will build compound interest and ill still be able to pay it.
Could be a number of things. - incorrectly set up from start - in a state where insurance has increased each year (CA, FL, Tx, any many more) - in a state where taxes increase frequently (Texas)
Thanks so much for explaining. Can you call your lender and ask how much is in your escrow account? I just assumed a mortgage from someone and im not sure how much there is in the account haha😅
So what you're saying is that we start paying a year in advance and then every month we're paying for the monthly payments of the following year so that we always stay ahead by one year?
Not really. Let’s take your insurance as an example. $1200/yr. Closing a loan in mid October. You pay your $1200 premium upfront + 3 months ($300) of prepaid to fund escrow account. Starting December 1 (first payment) you pay $100/mo into escrow each month so that by September of next year there is enough in there to pay the $1200 premium due to Renew the policy expiring in October. Hopefully that helps clarify
Sure, but would 5% on $3k change your life much? Also keep in mind you do get paid interest from servicer on this money AND being able to budget for tax/insurance not easy for all people
Hello Matt! Thank you for explaining the escrow account in detail. This helped to clear our doubt that we not paying the taxes, insurance twice. I do have one question though, I understand that for the first year you buy the home owners insurance and with the the first mortgage payment you start giving monthly insurance to escrow account for the next year. Now in case of 30 year loan plan, you keep doing this same thing until 29th year correct? cause technically you paid for the 30th year home insurance in advance through escrow account. Is my understanding right? on 30th year you pay mortgage-home insurance?
The money that goes into your escrow account each month is collecting towards the next payment due. Example… $100/mo goes into escrow for insurance every month of 2053 to pay $1200 payment due in December 2053 (insurance policy that’ll be good through Dec 2054)-- any money left in escrow after your mortgage is paid will be returned to you. Hope that helps
This video was very insightful as to why the moths in advance and thinking we had paid in advance and didn’t have to worry about payments till then. Nope, but now I understand partially thank you for your educó
Question: So if the loan amount is 360K & monthly mortgage is $2044, shouldn't the balance next month be $357,956? If so, I thought the principle only goes towards the mortgage loan. If thats the case , shouldnt the balance be $358, 484 ??Im little confused about that. Can you assist?
If the total payment is $2044 this is a combo of principal/interest/taxes/insurance Guesstimate/example $544 to escrow for taxes insurance $1100 to interest $400 to principal In this example your loan goes down by 400. Then next month by 403 Etc. Since interest portion is based on outstanding balance it’ll slowly be more principal and less interest as you go,,… Hope that helps
I have like zero math cells in my brain, so this is all crazy-making...but I can understand what you are saying. I purchased a home in 2022 and my mortgage company has changed FOUR times, which is also a bit nuts. But this last change has me paying $370 more/month...is that possible?! I talked to the county and my property taxes went up $1400 (I think to reflect the new value of the home), and my homeowners insurance went up $200, but that's $1600/year, not $4,400! I'm trying to get information from them, but I don't have much hope I will understand it, and that leaves me so open to getting scammed. When I call I can either barely understand the person, or they talk way above my head. Who can I have look at this and make sure it's right? My mortgage broker? Thanks!
Look at any “escrow analysis” they sent OR log into an online account to find that document- it should explain it, - my guess is that the larger change has to do with a make up in the old shortage
@@MattTheMortgageGuy Thanks. Ugh. They said that for some reason the old company didn't send that over, so they are going to get it, but that it is unlikely to change. Fishy? What does that mean, and 'old shortage'? Why did they underpay or not adjust earlier?
So the banks are collecting the interest in our money. I guess escrow is a good idea for those who irresponsible or don’t know how to invest. Really good for the banks.
@@MattTheMortgageGuy Why can't I set the money aside myself? Why a 3rd party? In some cases escrow is MANDATORY and they charge for the service. I got confused by the numbers, percentages, and terminology BUT I understand the concept now after talking to my mom. LOL She understood your vid and translated it for me. 😁
Has there ever been a situation where the third party, where the money is held in an escrow account gets depleted from whoever has access to it ?? Having someone else responsible for making sure that prop tax and insurance get paid behind closed doors seems a bit sketchy. I have trust issues, esp when it comes to someone else making sure my money is going where it needs to go. Closing for the first time this summer!
ATP!! is it even worth trying to buy and I feel like that’s what this is all about it’s a ploy to keep people renting instead of having true ownership and why tf you pay property taxes twice and year? And I feel like mortgage insurance should be put in an account that if you never use it you should get the money back
Contact the servicer to remove the escrow account if you’d like . You can pay taxes and insurance in full and only send the mortgage company the principal and interest. ( I prefer an escrow account to make it easier but it’s up to you)
I am a first-time homeowner March the 20th 2024 I will have been in my house for a year my question is I just got an escrow check for $753 I am confused as of if I should use the money or not
Attached to the check you’ll likely find an “escrow analysis” that’ll explain why they sent check, the estimated monthly they need to collect, and how they calculated overage
Every year I am informed that there is a shortage and the mortgage goes up. This year they went up over 300 hundred. I had the insurance changed and the mortgage was never adjusted. My question now is, can you have escrow collected from another source. This would keep the mortgage easier to pay with no misunderstanding. I also spotted a fee for 650. Can the bank charge a fee for holding your money in escrow..😢
Why do they pay us interest on our escrow account? We earned $73.21 in interest in this account…? I have a savings account and only get around 7 cents a month interest on it… this doesn’t make sense!!!!!??!!
Its common practice for servicers to pay interest on escrow accounts. I just saw a client's statement with about $7600 in escrow (expensive house) and they got $180 interest payment. IF you don't want it please send my way!
First time homeowner and I was stressed to see my new monthly payment. I'm glad I found this video because your explanation of the escrow account and what not made sense, Thank you!
Awesome!
You have no clue how much you’ve helped me. I’m a conversion specialist to convert construction loans to permanent financing, and the amount of my borrowers that I have that blow up my work phone, cursing me out about the collections in their escrow account, is crazy. I mainly came here to figure out the calculation due from the “number of months” collected specifically for property taxes outside of 2 month cushion, & outside of that, I found so much more info that took a ton of relief off of my shoulder. Not that I didn’t know what I was doing…. But the explaining part can be more complicated then it seems… even when u know what ur doing….
Thanks for the kind words! Keep the link handy and just tell your borrowers to go check out this video from your buddy Matt. Cheers to a great 2023!
First time homeowner and This is still clear as mud but you did a great job explaining
😂 watch 50-60 more videos. You’ll get there…
Matt - I stumbled upon your video today because my wife and I are closing on the home soon but this whole prepaid vs escrow just didn’t make sense. I spoke with the lender and they explained it fine but later I got confused as explaining to my wife. Now after watching your video, I totally Understand it. Thank you so much for explaining it well! Thanks for clarifying all our confusion :)
Glad it helped! Congrats on the new home! Any help you need in the future feel free to reach out to our team. Cheers!
@@MattTheMortgageGuy thank you Matt!
Thanks Matt. It makes perfect sense the way you explained it.
Glad it helped, it can be a confusing topic. Cheers!
Couldn’t have had better timing, I was just looking for this info last week. Thank Matt!
Glad it was helpful! Thanks for watching!
As someone who is in training to become a servicer for a mortgage company, this video helped a ton! Thank you!
You’re welcome!!
Wow super helpful. I am buying my first home and was absolutely befuddled by this, but now it seems so simple
So glad it helped! Love getting these messages. Have a great day & look us up next time you need to buy or refinance . 😁🔑 greatmortgagebroker.com
By the way, thank you for the video, very well explained . I appreciate the information you e provided very very much. Sometimes if not all times I find UA-cam videos much more helpful than calling people or asking other home owners.
Glad it was helpful
I love looking at my loan, escrow acct. I do work with my company and call them Mr. Cooper Co. . I do pay extra on my principle. the good thing about Mr. Cooper on my acct I can pay extra in escrow and principle if I want to when I want to, Also I can go and adjust my monthly mortgage payment with added escrow and or escrow. as I can also see what bills cost will be on home insurance and county taxes and make sure I have the money to pay them.
That’s great Don! Mr Cooper has a great application and does good with servicing. I’ve got 2 loans serviced by them and others with UWM and HomePoint. To get the loan originated you know where to go 😉➡️ greatmortgagebroker.com
@@MattTheMortgageGuy just got off the phone with them going over the escrow money needed for next year. I like learning about stuff, my home is #1 .
@@MattTheMortgageGuy just went to your web site and filled out the question. not really looking to refinance but looking
Thanks for the video! It totally made sense what Escrows are
I love all the great feedback! I am glad it helped. Cheers!
Thank you so much for the explanation, you helped me a lot. I really appreciate it.
I'm so glad it helped. I really enjoy making videos and appreciate you taking the time to let me know it was useful. If you have other questions you'd like me to answer in a video let me know, I am happy to help.
Wow this took all my confusion away, thank you
You are welcome!
I just got my escrow payments due after a year and was so confused. Thank you so much for explaining!
Glad it was helpful! Thanks for watching!
I watched a couple of other vids about escrow and this one was definitely the best. Thanks
Nice! Thanks for the kind feedback. I've explained it so many times maybe I'm finally understanding it!
Thanks for the kind words. Appreciate it!
Can you prepay your escrow or is it better to put toward principal
Is that why banks or even credit union every 1 or 2 years adjust your mortgage payments based off terms and conditions of your escrow account?
This video was so helpful thank you so much for posting this
Thank you Claudia! I love that so many people find it valuable.
So I have a question I’m closing on a house on November 28, 2022 and lender has at closing cost 12 months of taxes and also 2 months of reserves. I know the example you showed closing was in june and 12 months of taxes were charged. But since I’m closing end of November is that accurate for lender to include in taxes 12 months at closing? I really appreciate your feedback on this
Are escrow account limited to home purchase and if not what are over areas of purchase does it extend to.
Escrow accounts apply to all mortgages- both on refinance and purchase transactions
thank you man for you help i just got it with an extra on my escrow i was lost 😞 but now you make it crystal clear for me. now i have one question 🙋 will this escrow ride off after a while or it will remain for life of the mortgage ?
you'll always have a need for escrow as you'll always have taxes and insurance
This was great! Thanks Matt!
Thanks for watching!
Awesome explanation Matt, Great job!!!
Glad you liked it!
This is exactly what i was looking for. Great video, thank you.
Thanks ! Glad it helped
Great video! Fantastic explanation!
Thanks Eddie!
How is the required amount due calculated annually each year for the analysis...what makes up that amount?
Total prop taxes + total homeowners insurance + pmi (if needed) /12 months + reserves
Great video Matt.
Thanks!
I'm a dummy in real estate bussines u help me to understand rules in this games thanks a lot for u time for sharing this video 👍👍👍👍
I’m happy to help ! Thank you kindly for the comment. Cheers!
What about the second and third escrow accounts?
Can I postpone removing my loan and inspection contingencies if I haven’t been provided with the HOA disclosures?
I’d imagine so. Have your realtor request extension, and they can explain why
Some lenders send videos if theirs an escrow shortage if payment changes the following year keep in mind taxes or insurance may have gone up lenders should be sending a detailed analysis I work for a mortgage company and man having to go over escrow 😐😒 at closing they don’t tell customers payment may change principal and interest stay the same but escrow changes may increase your payment
Just caught the end of your live and wasn't able to get my question in. I just bought a new home and did not elect for an escrow account. How does supplimental property tax affect me if I don't have an escrow account. Does it affect me at all? Thanks in advanced.
You'll still have to pay the supplemental tax bill. Watch your mailbox :)
Good Explanation!
Thanks!
Really very well explained
Thanks !
Just got hooked on watching your videos, the info. and your ability to break it down is invaluable!
I did have a question though.
Is it ever possible to eliminate an Escrow Account when getting a mortgage?
I'm asking because I hate thinking they are keeping a (%) of my $$ as a buffer each month.
Case in point, I an currently going through a ReFi and have had to inform my mortgage Co. that my property taxes have gone down, already a sore spot that I should have to do their leg work.
And I should...
1) Have a Lower Mortgage Payment.
2) Am entitled to a refund of a portion of my escrow account.
And I do not know when I will be seeing either, yet.
When you refi do the new loan without escrows. Totally up to you. More work to pay county and ins company on your own but no funds held in reserve (they pay you interest though 😁)
And thanks for the kind words! Glad you are enjoying!
Thank you for this! If your home value increases therefore your property taxes increase, would that new valuation of your home count toward your equity and be able to help you get rid of your PMI?
yes, depending on what type of loan you have you'll have the opportunity to remove mortgage insurance with 20%+ equity in your home.
I closed a couple months ago and got a builders risk policy while I made some necessary renovations. Now I'm trying to get an H03 policy thru a different company, but the escrow account doesn't have quite enough for the new premium. I guess I can't cancel the old policy until the new one is in place (and get the refund). Is it worth it for me to put more money in escrow to cover that, or just pay out of pocket for the full amount or the difference?
so my question is when i refid lastt year they sent me a check for the escrow overage and i cashed and put it right back into the escrow. a week ago i saw my payment went up 25$ a month and called. i had a surplus in my escrow, they sent me a check for the remainder of the surplus and my monthly"taxes" went up 25$ a month they said. i believe they sent the check before they reevaled the taxes so they can put the taxes on the loan and make interest off of it am i wrong?
nothing gets added to your loan balance so no interest is being made on that. taxes and insurance are a separate escrow account
Great video
Thanks Janelle! I’m glad these videos are useful and helping folks.
Would you recommend not putting money in an Escrow to lower closing costs or would you take that as a sign that it might not be the right time to buy and save up some more $$ to close with Escrows.
Thats a good question Juan and I think your intuition is right about a sign. If you don't have the $3k-$4k required to set up an escrow account buying a home could be a bad idea. First off you'll have to save up to pay the taxes and insurance seperate and imagine if a repair costing $4k+ came up ? You'd be in a terrible position. My gut says wait and do it when you have money to set up the escrow account AND a few months of reserves in the bank. Thanks for watching!
5:10 WTF.... " Reserves" lmaoooo love this guy :)
1 take, no edits. Even when my brain is buffering… 😂
soo idk if you are still paying attention too this thread but i was wondering my lender im getting ready to close on a loan. i seen the paper work and it said remaining to close is 2843 and the lender keeps letting me i need 3984. i did not know that i was going to be put through escrow its a fha loan but my question is will this be calculated in with closing ?
What if you don’t want the escrow? What do you do about what’s in there.
You can "waive" escrows on some loan types on pay that separately. Check with your lender some loan types require escrow
Trucking companies are doing this through “Lease purchase programs “ and they are ripping drivers off. The difference is that the escrow accumulated doesn’t go towards taxes , but instead they are saying that it is an “average service amount “ that goes towards repairs which basically puts all drivers in a “pool” regarding escrow saying that each drivers maintenance bills over the course of a year averages out to the same. I totally disagree with that philosophy seeing that each truck will occur different issues and it’s not my responsibility to assist using my accumulated escrow to help within another drivers repairs. If I paid 10k in escrow for the year and my total repairs for that year totaled $2000 then where is my $8000 going??? That money should be reimbursed or put towards my taxes 1099
That sounds terrible. With mortgage it’s specific to each borrower. That “pool” idea sounds messy. Sorry about that
THANK YOU SO MUCH MATT! ❤️
I love how you explained everything and the breakdown. I appreciate it!
New subscriber ✨
Awesome! Thank you!
Thanks for your vedio! My question is that I sold my property at the end of last year (2021), was the escrow account closed automatically during the closing process? I believe I still have some money in there and I do not see any form of refund. So I'm confused.
They would close that account and subtract any balance from your mortgage balance at payoff…
Do you make interest on this “savings account” aka escrow?
Most of them do pay interest , yes.
Sir Escrow account open on bank ?
you did a great job explaining this..i understand how it works now..do you know if veterans get reimbursed property taxes if during that year they became total and permanent disabled which means prooerty taxes are omitted
Great question. You should get it refunded since it wasn't due to county if exempt. Contact the county and THANKS for your service
How exactly did you get the principal interest payment of $1516?
$360k loan at 2.99% interest
Hey matt this video was very expla natory but i was wondering what if i take out my escrow and just put that money in a mutual fund? It will build compound interest and ill still be able to pay it.
Im always short , how is that possible?
Could be a number of things.
- incorrectly set up from start - in a state where insurance has increased each year
(CA, FL, Tx, any many more)
- in a state where taxes increase frequently (Texas)
Thanks so much for explaining. Can you call your lender and ask how much is in your escrow account? I just assumed a mortgage from someone and im not sure how much there is in the account haha😅
Do they share statements with you? Should be escrow balance on monthly statement
@MattTheMortgageGuy I'll have to call and ask! Thank you Matt!
So what you're saying is that we start paying a year in advance and then every month we're paying for the monthly payments of the following year so that we always stay ahead by one year?
Not really. Let’s take your insurance as an example. $1200/yr. Closing a loan in mid October. You pay your $1200 premium upfront + 3 months ($300) of prepaid to fund escrow account. Starting December 1 (first payment) you pay $100/mo into escrow each month so that by September of next year there is enough in there to pay the $1200 premium due to Renew the policy expiring in October. Hopefully that helps clarify
I wish i was managing my own over the last 3 years. Would have been able to collect 5% interest on it
Sure, but would 5% on $3k change your life much? Also keep in mind you do get paid interest from servicer on this money AND being able to budget for tax/insurance not easy for all people
@@MattTheMortgageGuy it would cover the slow increase in taxes and insurance rates. Not all escrow are paying interest either.
Being a veteran with 100% disability makes the property tax exempted right?
Hello Matt! Thank you for explaining the escrow account in detail. This helped to clear our doubt that we not paying the taxes, insurance twice. I do have one question though, I understand that for the first year you buy the home owners insurance and with the the first mortgage payment you start giving monthly insurance to escrow account for the next year. Now in case of 30 year loan plan, you keep doing this same thing until 29th year correct? cause technically you paid for the 30th year home insurance in advance through escrow account. Is my understanding right? on 30th year you pay mortgage-home insurance?
The money that goes into your escrow account each month is collecting towards the next payment due. Example… $100/mo goes into escrow for insurance every month of 2053 to pay $1200 payment due in December 2053 (insurance policy that’ll be good through Dec 2054)-- any money left in escrow after your mortgage is paid will be returned to you. Hope that helps
My mortgage went from 1,700 a month to 2,600 because of escrow what should I do?
how exactly did this happen? im closing soon and scared this will happen to me, Did you choose not to have escrow account?
Im not paying every month unless they are taking from my mortgage payment
They collect it with your mortgage payment
Thank you brother, good explanation.
Glad it was helpful!
This video was very insightful as to why the moths in advance and thinking we had paid in advance and didn’t have to worry about payments till then. Nope, but now I understand partially thank you for your educó
Glad it helped!
Question: So if the loan amount is 360K & monthly mortgage is $2044, shouldn't the balance next month be $357,956? If so, I thought the principle only goes towards the mortgage loan. If thats the case , shouldnt the balance be $358, 484 ??Im little confused about that. Can you assist?
If the total payment is $2044 this is a combo of principal/interest/taxes/insurance
Guesstimate/example
$544 to escrow for taxes insurance
$1100 to interest
$400 to principal
In this example your loan goes down by 400.
Then next month by 403
Etc.
Since interest portion is based on outstanding balance it’ll slowly be more principal and less interest as you go,,…
Hope that helps
Very helpful! Thank you
Glad you found it helpful!
I have like zero math cells in my brain, so this is all crazy-making...but I can understand what you are saying. I purchased a home in 2022 and my mortgage company has changed FOUR times, which is also a bit nuts. But this last change has me paying $370 more/month...is that possible?! I talked to the county and my property taxes went up $1400 (I think to reflect the new value of the home), and my homeowners insurance went up $200, but that's $1600/year, not $4,400! I'm trying to get information from them, but I don't have much hope I will understand it, and that leaves me so open to getting scammed. When I call I can either barely understand the person, or they talk way above my head. Who can I have look at this and make sure it's right? My mortgage broker? Thanks!
Look at any “escrow analysis” they sent OR log into an online account to find that document- it should explain it, - my guess is that the larger change has to do with a make up in the old shortage
@@MattTheMortgageGuy Thanks. Ugh. They said that for some reason the old company didn't send that over, so they are going to get it, but that it is unlikely to change. Fishy? What does that mean, and 'old shortage'? Why did they underpay or not adjust earlier?
So the banks are collecting the interest in our money. I guess escrow is a good idea for those who irresponsible or don’t know how to invest. Really good for the banks.
Borrower gets paid that interest from most loan servicer
@@MattTheMortgageGuy ah okay, that sounds better. I’m sure they would turn around and loan that money out to someone else and collect interest on it.
Watching this in 2024. Can only dream about 2.99%
I feel you! 🥹
I already pay my home owner insurance on my own. I dont pay taxes and no pmi. So why is my lender still taking money out for escrow.
Are they collecting 1/12 of premium per month to have next years insurance premium collected and ready to pay?
@@MattTheMortgageGuyhopefully now they are collecting was is desrved and what value they most likely provided... nothing.
And NOPE!! LOL still confused. This is like a math class in college.😃
Hit it one more time!
@@MattTheMortgageGuy Why can't I set the money aside myself? Why a 3rd party? In some cases escrow is MANDATORY and they charge for the service. I got confused by the numbers, percentages, and terminology BUT I understand the concept now after talking to my mom. LOL She understood your vid and translated it for me. 😁
shout out to Moms for the translation! For clarity it is required on some loan types but never a charge associated
Ah 2.99% 30y fixed interest. I remember when that was still a thing 🥲
I understand now!!!👍
Awesome!!!
Thanks for the video Matt !
Thanks for watching!
Thanks so much for the explanation. It really helped me understand these processes and the numbers on my closing disclosure 🙏
Glad it was helpful!
Thanks Matt!!!! Definitely cleared my mind in terms of how escrow accounts work!
Happy to help!
Has there ever been a situation where the third party, where the money is held in an escrow account gets depleted from whoever has access to it ?? Having someone else responsible for making sure that prop tax and insurance get paid behind closed doors seems a bit sketchy. I have trust issues, esp when it comes to someone else making sure my money is going where it needs to go. Closing for the first time this summer!
Also, why is it set up this way? Why can't we, as the homeowner make these payments ourselves?
Correction: Make these payments directly to where they need to go vs. accumulating them in a third party's account?
you can
you can waive escrows and pay yourself. most want the free budgeting escrows allows
ATP!! is it even worth trying to buy and I feel like that’s what this is all about it’s a ploy to keep people renting instead of having true ownership and why tf you pay property taxes twice and year?
And I feel like mortgage insurance should be put in an account that if you never use it you should get the money back
My escrow is about 6000 a year.Can I pay that ahead of time and make my monthly payment less?
Contact the servicer to remove the escrow account if you’d like .
You can pay taxes and insurance in full and only send the mortgage company the principal and interest. ( I prefer an escrow account to make it easier but it’s up to you)
I am a first-time homeowner March the 20th 2024 I will have been in my house for a year my question is I just got an escrow check for $753 I am confused as of if I should use the money or not
Attached to the check you’ll likely find an “escrow analysis” that’ll explain why they sent check, the estimated monthly they need to collect, and how they calculated overage
Sincerely, thank you!
You're very welcome!
2.999% ahhhh the good Ole days.....
I know!! We didn’t know how sweet that was until it was gone!
Every year I am informed that there is a shortage and the mortgage goes up. This year they went up over 300 hundred. I had the insurance
changed and the mortgage was never adjusted. My question now is, can you have escrow collected from another source. This would keep the mortgage easier to pay with no misunderstanding.
I also spotted a fee for 650.
Can the bank charge a fee for holding your money in escrow..😢
they can't charge you a fee. I would contact them and see what the heck that is.
Thanks
Glad it was helpful!
Can the bank put more into the escrow account then towards the mortgage.
No, the escrow account is only to be used for taxes and insurance. the principal and interest payment is unaffected.
What should you do if your escrow is in negative and now the balance is split in 12 months? Should we pay even more so it doesn’t happen again??
They should have already adjusted so it doesn’t happen again if they did escrow analysis to calculate that shortage
Ok this helped me out because i sure was thinking why is my monthly payment higher if i just paid 1 year insurance
Thank you, I understand so much more now. This has always been a bit of a mystery to me, glad to hear it explained so well.
Glad it was helpful!
Why do they pay us interest on our escrow account? We earned $73.21 in interest in this account…? I have a savings account and only get around 7 cents a month interest on it… this doesn’t make sense!!!!!??!!
Its common practice for servicers to pay interest on escrow accounts. I just saw a client's statement with about $7600 in escrow (expensive house) and they got $180 interest payment. IF you don't want it please send my way!
DAMN bro, you give out yo number and everything, I FEEL U?🤔
this was before I was a big shot! Oh well, hit me up! LOL
Thank you for this video. I just bought a home and I needed to KNOW WHY I was paying so much into Escrow!!! Makes sense now!
Glad I could help!
Good video but background music noisy thanks
Thanks for feedback! I’ve since cut out background music
6:19 oh, OK so in the same way my employer will front me the extra money to make sure that I can pay my family’s bills ahead of time, correct?
Thank you. Here my question, what about all the leftover money in the escrow account after you pay off the loan?
It comes back to you. The servicer cuts you a check. Just like when you refinance and it gets paid off you get a check within 30 days
How do I contact you, Matt?
We don't pay reserves
Matt, this is buying with a loan.
Cash buying why? 4 months
No Escrow account?
Explain cash buying, please
Hey matt if you have a shortage should you pay the lump sum upfront or just let your monthly go up and pay month to month?? Ty
Totally up to you, depends on which you prefer. I usually pay the lump sum so my monthly stays low
What's showing on my estimated closing costs that you discussed as being confusing is exactly what brought me here.
Awesome
Hope it helped!
Yea what if I don’t want to deal with escrow and just pay the stuff myself. It seem like a short in the wallet for me to get charged in advanced.
You can if you want. Just got to make sure you budget for them so you’re not in a pinch when bill comes
I think it would be better to look into investing instead of allowing banks to collect interest off the money they’re “Saving” for you.
So having the escrow account, you shouldn’t be paying for any insurance then?
The monies you put into escrow get disbursed to pay insurance
@@MattTheMortgageGuy thank you!
Just pay your shit yourself. Never trust banks.
Or have it automated , tracked, and showed to you monthly on the mortgage statement. THis is done by the servicer, not the banks.
Thank youuuu for sharing
Thanks for watching!