Escrow Shortage...What do I do?

Question

Every year or two around this time, I get notice from my mortgage company that I have a shortage in my escrow account and have to pay the difference. My question is does it make sense to apply additional money to the escrow account through out the year? I don't apply any to the principal. It seems that I keep paying more and more on the mortgage and I am thinking about getting a part time job and getting rid of some things like cable t.v. Please help. I don't want to get rid of my house because I know that rent in my area is just as much as mortgage and I am not really interested in a room-mate.

Answer 1

They should reanalyze your account every year to help cover the change.  Ask them to increase your payment.  $10 a month is easier to deal with than $120 at the end of the year.  

Answer 2

Values are going down why are your taxes going up?  Nevertheless, your mortgage company should be doing escrow analysis 6 months before your next tax due date and increase your payments by enough to cover the shortage.

Answer 3

It may be that your property taxes increase or your homeowners insurance increases every couple of years causing your escrow to run short.  

When you pay your mortgage add in a few extra bucks that you designate to go to your escrow account.  Or, better yet, start a savings account that you can draw from when you need extra funds for your escrow.  

That way you make the money work for you.