In September, Caroline Hernandez, a Florida homeowner, got a notice from her mortgage lender that her escrow account that held funds to pay her homeowners insurance and property taxes was short by $3,522 because her insurance premiums had increased.
The shortage meant that Hernandez’s mortgage payment would increase by $800 a month unless she paid the entire shortfall upfront. She did with her savings, but six months later, her escrow was short again by $1,792, which she again paid from savings.
“Florida is talking about another 40- to 60-percent increase in homeowners insurance,” Hernandez said. “I can’t afford another shortage.”
The scenario is not uncommon now for homeowners. In a yet unreleased 2023 survey from J.D. Power provided exclusively to Yahoo Finance, 56% of homeowners indicated that their escrow payment increased in the last 12 months, up from 51% in 2021 and 49% in 2020.
The shortages reflect the increases in homeowners insurance premiums from natural disasters and inflation and higher property tax assessments after home prices shot up during the hot pandemic housing market. The shortfalls, though, are causing financial strain for some homeowners who have already had their budgets stretched from inflation in the last year.
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