Mortgage Escrow
When you sign up for a mortgage you will have your mortgage escrowed or non-escrow. Escrow is where your mortgage payments will be include in your taxes/and or insurance payments. Your lender will base your escrow amount on your prior year escrow amount that was determinedby your local taxing authorities. If your property is not insured it will be insured at a higher rate by your lender with less coverage. However, the problem with that is that your escrow may have increased or decreased from when the last tax amount that was assessed, or your taxes might have decreased leaving you’re a credit. If that happens you would get a check back if your have a $50 or more escrow credit, by law. If you are delinquent on your mortgage your check may be applied to what you owe on your mortgage. Just like if you are negative with your escrow amount you will end up owing on your escrow. Therefore your may have some negative escrow on your mortgage balance, and eventually your mortgage company will force that negative escrow amount into your regular mortgage payments, or increase it until you are no longer negative with your escrow.
In such a case a similar thing would happen as with a forced escrow. You would have to make a separate mortgage payment, or your mortgage company would do a force escrow on your mortgage payments. For example, if you owe $12,000 on your taxes and your mortgage payment is $2,000/month. Your lender would give you some time to pay up your negative escrow, If you do not make your negative escrow payment, your mortgage company would simply increase your mortgage payments by $1,000 month until your are all caught up with your negative escrow. You may talk to your lender to see if they will spread your negative escrow out over a few years. Most lenders will give you up to about 5 years to pay back on what you owe and give you time to catch up. They just divide they amount of time they are allowing by what you owe in negative escrow, and increase your payments by that amount. Lenders are usually flexible with this and want to work with you to help you get caught up with all that you owe in escrow.
Maintaining your escrow is important part of your mortgage payment because your property can go to a tax sale if you stay past due with your escrow, and it does not get discovered by your lender in time. Always advise your lender if you are behind with your mortgage escrow because it will benefit you both, and your lender in keeping your home and not loosing it to a tax sale. You can loose your property to a tax sale for any amount outstanding with you property taxes. Even your Home Owners Association Dues(HOA) can get your foreclosed on. Your lender will always work with your because they have an interest in the property, it’s an asset for them. A tax sale tax takes priority over any other liens on the property. Always keep an eye on your escrow, even if it is escrowed to make sure you do not owe anything additional beyond your regular payments.
