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# which is better to pay monthly or up front

so i recieved a notice that i'm short on my escrow amount for the yr. they gave me 2 options to pay the shortage up front or to pay it monthly. what i don't get is how the number don't seem to match up. i owe \$269 but if i pay monthly \$5.12 difference then i'm paying now this only totals \$61.44. now if i pay the fee upfront then the new monthly payment is \$992.04 which to me looks nice but i pay \$205 which doesn't come close to paying the \$269 which is my shortage. basicly since my math sucks and i don't understand what i read can someone please explain to me what this means and which option would benefit me. it might seem obvious to other but please don't bash.

Asked by melody77 at 8:23 PM on Jun. 18, 2010 in Money & Work

Level 18 (5,435 Credits)
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Answers (9)
• We've always have paid our shortages monthly. Although the amount for the monthly is always the same as the lump sum, and it always covers our shortage. So I'm understanding why the the monthly, or lumps sum is not matching the shortage. If your shortage is truly \$269 then the lump sum or monthly payments should equal \$269. Are you sure the \$269 is your shortage and not the amount that you already have in your "reserve". They NEVER let the reserve hit 0 there has to be a certain % in the "reserve". I don't know what less to say.....I could "see" the statement it might be different.

Answer by SAHMinIL2 at 8:32 PM on Jun. 18, 2010

• We payed our shortage up front. Got it out of the way. So we know all the escrow is in there.

Answer by louise2 at 8:28 PM on Jun. 18, 2010

• I'm NOT understanding why the lump sum, or monthly does NOT equal the shortage.

Answer by SAHMinIL2 at 8:33 PM on Jun. 18, 2010

• What are you talking about,so you are saying the more escrow you have the lower your payment will be. How do you know how much escrow you have?And one more question do you have to pay escrow back?

Answer by mamaofficer at 8:36 PM on Jun. 18, 2010

• We pay our mortgage every month Our payment is really two parts together A (principle and interest on the loan) + B escrow (escrow is the mortgage company collecting x amount every month to cover the est. amounts needed for property taxes and home-owners insurance). The mortgage company then takes the escrow money and pays the property taxes and home owners insurance yearly on the behave of the home owner. Seeing the money collected is estimated, once a year the mortgage company does a review on the account and make adjustment to the escrow account as needed. Sometimes there is an overage. This means you gave the mortgage company to much money to cover the cost of taxes and insurance of the year. So they, the mortgage company gives the homeowner a check. Other times there's a shortage. There wasn't enough to cover taxes/insurance so the homeowner has to pay in more.

Answer by SAHMinIL2 at 8:44 PM on Jun. 18, 2010

• The shortage or overage amount is based on the difference between the previous years taxes and insurance premiums. We've been in our home 6 years. Out of those 6 years we've had 3 overages and 2 shortages. Our account doesn't get review until late Nov, however when that happens it will be another overage. On years we have shortages our monthly payments went up \$5-10. On years we've had shortages our payments went down \$5 or so. The years it's gone down for us are the years we protested our taxes. I imagine it will go up for us this year seeing our taxes this year are \$15 more then last year and our insurance is \$30 more. That's an increase of \$45 so our monthly new bill should only be about \$4 more then it now when they assess our account in Nov.

Answer by SAHMinIL2 at 8:55 PM on Jun. 18, 2010

• thats why i'm confused too cause they don't match up and it says clear as day that the shortage amount is \$269.02.

Answer by melody77 at 10:56 PM on Jun. 18, 2010

• I would contact your mortgage holder and inquire about it. Our monthly payment or the lump sum option has ALWAYS equal our shortage. That's the way it should be. It shouldn't matter if it's one lump sum or a monthly payment. Both options SHOULD equal the shortage.

Answer by SAHMinIL2 at 10:26 AM on Jun. 19, 2010

• IF you have the money to pay up front, pay up front. Our escrow was short 3 years back when we first ever purchased a home, and our mortgage would have gone from \$1200/month to \$1900/month. We were \$2500 short, TY CITIBANK!!!! I was so thankful my dad let me borrow the cash to pay up front, for we would have never afforded that mortgage.

Answer by Anonymous at 6:23 PM on Jun. 19, 2010

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