I’ve received several calls from clients over the past couple of months. In each case, they’d received a notice from their mortgage company notifying them their mortgage payment was changing due to a deficit in their escrow account. They had the option of paying the escrow shortage or it could be factored into their already increased monthly home mortgage payment. The same thing happened to Sheri and me.
There are three factors that contribute to anyone experiencing a shortfall in their escrow account:
- An increase in the home insurance premium
- An increase in the property taxes
- Both could have increased.
Texas home insurance rates have been increasing consistently for the past 5 years. Insurance companies have reported average premium increases of 5% to 20% statewide in the last year. Rates across north Texas have risen that much or more, and some of the carriers have even raised the wind / hail deductible to either 1.5% or 2%.
Home insurance rates aren’t the only thing that’s gone up. Dallas County property taxes rose by 7% last year and 4.3% in 2013. Property taxes are increasing due to a number of factors; growth in the economy, an increase in the overall purchase price of homes, and catching up from three years of 1.7% increases from 2009 to 2011. Collin County’s property tax rate increased by 7% last year on average and similar increases happened in Denton and Tarrant Counties. Rates in all 4 counties notched another increase this year.
Add these two increases together and it’s no wonder people are receiving notices from their mortgage company stating that there is a shortage of funds in their escrow accounts. When there’s a shortage in the escrow account, then monthly home mortgage payments can only increase. There are a couple of actions we recommend when this happens:
- Review your home insurance with your agent
- Contest your property tax increase
We actively review each client’s home and car insurance renewal. If we’re able to provide savings by moving them to another insurance company we discuss that with the homeowner and do that. If it doesn’t make sense to move the policy because there is no lower cost option available, we review the coverage to see if there are coverages which should be changed or removed.
When it doesn’t make sense to remove coverage we recommend staying put to see what happens with home insurance rates in the coming year and suggest they evaluate contesting their property tax increase. Dallas County residents can file a protest online, in writing, or in person. To file an online property tax challenge go to www.dallascad.org. If the appraisal district agrees with you, you’ll receive an email notifying you of that. If they disagree, then you’ll have the option of scheduling a review board hearing. All protests must be filed on or before June 1 of this year.
What do you think? Share your thoughts, suggestions, questions, and experiences with us in the comments section of our Facebook, Google +, or LinkedIn pages. I’d love to hear from you!