Today's the day Wells Fargo sends me my annual little surprise!!
When ever I have first time home buyers I end up explaining what it means for the mortgage company to hold tax and insurance in escrow. Part of that explanation involves the promise of the little annual surprise from the mortgage company. Mine came today-it was a check for $59.74 followed by a drop in my monthly mortgage payment of $6.58. That's not much but it pushed the payment from just over $1000.00 to just under $997.00-looks so much better.
What does this mean to my first time home buyer? Just a little gift or bill once a year. In order for the mortgage company to have enough money in your escrow account to pay your taxes and your home insurance for you, you must send in 1/12 of the total estimated amount needed with each monthly mortgage payment. They then pay your taxes and insurance as they come due. The little gift comes when they over estimate what your taxes or insurance will be. The bill comes when they underestimate the amount.
Over the years that I have had my mortgage I have had as much as a $1200.00 refund and owed as much as $340.00. It is to your advantage to pay this amount due when you receive the bill. Some mortgage companies will add the amount on the back end of your mortgage if you wish. Not a good idea. Make sure when you send the payment that you send it well marked as escrow shortage payment and that you send it as a separate payment from your regular mortgage payment.
When you receive your refund-enjoy it-it is your little savings gift from your mortgage company-no interest of course but still a little yahoo.
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Marilyn S. Tolhuizen, N W Indiana Real Estate Specialist
McColly Real Estate, Realtor, GRI, ePro
Crown Point, Munster, Dyer, St. John, Schererville, Winfield, Merrillville, Hobart, Portage, Hammond, Cedar Lake, Lowell, Lake of the Four Seasons, Demotte, Hebron, Wheatfield