10 Best Hunting Scope Rings

Best Hunting Scope Rings in 2023

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Money Hunting? Check Your Mortgage Statement

A quick read of your mortgage statement will determine whether an escrow cushion is included in your payment. Eliminating it may reduce your mortgage payment and uncover an escrow overage that belongs in your pocket, not in your escrow account.

Upon scanning my mortgage statement last month, my suspicions were confirmed. My payment had unexpectedly increased by $15 per month, despite a fixed interest rate, falling property taxes and steady insurance costs. While $15 is barely enough to buy a fast food meal for my family, being the skeptical cheapskate I am, it was more than enough to get my attention.

According to the mortgage statement, my bank had performed an escrow analysis on my account. This analysis is a standard, annual accounting to determine whether my escrow account, which holds my tax and insurance funds, would have sufficient money for the rest of the year. If the bank determined it would have too little, my payment would go up to cover the deficiency.

Funny, my property taxes had gone down by a few bucks and my escrow account had plenty of money in it. In fact, it had an overage, but we'll get to that in a minute.

So why did my payment go up? Further reading turned up what the bank refers to as a "reserve requirement" - a "cushion" of money in the escrow account that can be used to cover unexpected insurance or tax increases. Federal and state laws permit the bank to collect up to 1/6 of annual escrowed expenses as a reserve, which is why it had determined that I should contribute an additional $21 to my escrow account via my mortgage payment. (Since my taxes had gone down $6 per month, this resulted in a net payment increase of $15.)

The bank's language is key here. The bank is permitted to collect a cushion. Federal and state laws allow them to collect it. However, no law actually requires its collection, and a lender has discretion over when to collect the reserve and how much to collect, up to 1/6 of annual escrow costs.

I telephoned my mortgage company and, after navigating their convoluted and slightly annoying menus, spoke to a live person who acknowledged that I was not required to pay the $21 per month "cushion." The representative removed the charge from my account and reminded me that if the bank finds too few escrow funds in next year's escrow analysis, I will be required to pay that amount. I told him to bill me when that happens.

Near the end of the call, the bank representative added one more thing: Would I also appreciate a refund of the nearly $400 overage presently sitting in my escrow account? (It seems I hadn't caught the "cushion" soon enough and had paid it in prior years.) I thanked him for the information and requested that the bank cut me a check, which has already been deposited into my checking account.

I may be slightly paranoid about the bills I pay, but my suspicions paid me $252 for the year of "cushion" I won't be shelling out, uncovered another $400 in money I was loaning - interest free - to the bank via my escrow overage, and took my mortgage payment down from its previous amount by $6 per month. Not a bad day's work, considering all I had to do was read my bill and make a phone call.