Our mortgage is still more than 80% of our home’s value (and a higher percentage every day it seems, as the value of our home plummets, but that’s another story) so we’re required by our lender to have an escrow account through them to pay our homeowner’s insurance and property taxes. This isn’t a big deal, except that I’d rather handle the money myself, but I am patient enough to wait until we get our mortgage paid down to the appropriate level.
In the past two years since we’ve owned our home, we’ve had our monthly payment adjusted upwards twice from its origin due to projected escrow shortages. There is a minimum balance required in our escrow account, and if our property taxes or homeowner’s insurance is higher than the bank expects, the minimum balance drops too low and then we have to put more money in (which is what raises our monthly payment). It has never been a huge upward increase in our payment, but it has so far always been up.
So this year when I got the annual letter from the mortgage holder, I was less than excited. But when I opened it, my tune changed immediately. Not only does our monthly payment go down for the next year by $43.66, we also got a check for $996.86 because we have too much in our escrow account. Our property taxes have gone down by over $500, which is where the escrow overage came from (the good side benefit of lower property values, I guess).
We discussed what to do with the unexpected windfall, both the check and the monthly mortgage decrease, and we’ll be putting both towards my student loan. So this month I’ll be paying $1496.86 towards the student loan, and every month after until it is gone I’ll bump the minimum we pay up by $43.66. We discussed the idea of putting it towards our mortgage principal since it came from the mortgage company, but decided we’d rather keep concentrating on that last non-mortgage debt and make it go away as fast as possible.
Sometimes the readjustment letter has good news, after all.