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The “Escrow Shortage” Trap: Why your mortgage payment can jump in Year 2
A lot of first-time buyers think their mortgage payment is fixed for 30 years. That is a dangerous misconception.
While your Principal & Interest (P&I) is fixed, your payment also includes an escrow account for property taxes and homeowners insurance.
When your county reassesses your property (which often happens after a sale) or when insurance premiums rise, your lender will recalculate your escrow. The result? Your monthly payment can jump by $200-$400 in Year 2, even with a fixed-rate mortgage.
This is called an “Escrow Shortage,” and it catches thousands of buyers off guard every year.
Has anyone here experienced this? How did you handle the sudden increase?
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