Why did my mortgage payment go up $250?

What $250 a month actually is

Two hundred and fifty dollars a month is $3,000 a year. When taxes and insurance did not rise by anything close to $3,000, a $250 increase is the signature of a shortage being repaid. The shortage is last year's hole. The higher base payment, if there is one, is this year's bills. They get stacked, and the coupon looks like the bills exploded.

Over a year, $250 is $3,000. That annual figure is the one to match against a tax bill or an insurance premium, because those bills arrive once or twice a year and escrow turns them into a monthly deposit. Principal and interest on a fixed-rate loan does not produce a sudden $250 step-up. If the rate on the statement is unchanged, stop looking at the rate.

A worked example

Monthly escrow for the new tax and insurance bills is $480. The analysis also finds a $3,000 shortage. Spread over 12 months, the shortage adds $250. The new escrow deposit is $730. Last year's deposit was $480. The entire $250 increase is the shortage, and it is temporary if next year's analysis does not create a new one.

Where to look on the statement

A shortage of $3,000 is larger than one month of a $480 escrow payment, so the servicer may leave it or collect it in equal monthly payments over at least 12 months. That is 12 CFR § 1024.17(f)(3)(ii). A letter that demands the $3,000 within 30 days, or over six months, does not match that rule. A shortage smaller than one month of escrow has a different menu: leave it, collect it in 30 days, or spread it over at least 12 months.

The annual escrow account statement has two jobs: a history of what was paid, and a projection of what will be paid. The payment change lives in the projection. Bring the insurance declarations page and the tax bill to the same table. A line that does not match those documents is the line to ask about, even when the monthly total is a round number like $250.

The mistake this amount invites

People divide the payment increase by the shortage and stop. Also check the new base. If taxes and insurance rose by $60 a month and the shortage adds $250, the coupon is up $310, not $250. And a cushion above one-sixth of annual disbursements can be hiding in the same statement. The shortage rule and the cushion cap are separate tests.

What to do this week

You can do this with the payment explainer or on paper. The goal is a split of the $250 that names a document for each dollar, then one action for each document.

• Find the shortage amount and the number of months. $3,000 over 12 months is $250. $3,000 over 6 months is $500, which is too fast for a shortage this size.
• See whether the shortage is really a deficiency, which is a negative balance the servicer already advanced. Large deficiencies can be collected over two or more months, a shorter period than a large shortage.
• Plan for the $250 to last through the repayment year, then ask for a new analysis if it is still there after that.

Questions people ask about this

Sources

• 12 CFR § 1024.17, Escrow accounts (Regulation X)
• CFPB: What should I do if I have problems with my escrow account?