DAVID PATCHIN

Desmond, a $400/month jump in payment is painful for most home owners. As a local home owner myself, I know that hurts. Unfortunately, it is normal because your lender is likely just following federal rules (RESPA / Regulation X) which let servicers spread an escrow shortage over 12 months. The rules require your escrow account not to dip below 1/6th of annual disbursements, which is 2 months of escrow payments. If they know it will go below that, they are required to increase the escrow payment to make sure that does not happen. You can make it up in lump sum, which could be a much bigger payment, or spread of a year. It could help to ask your mortgage servicer to spread the jump over 2 years to soften the blow, or to do a combination of a partial "lump sum" now with an increased escrow payment over 18 or 24 months. They may be more flexible than the initial notice indicates. One way to minimize these escrow "shocks" when municipalities and counties are raising taxes is to look at your home owners insurance premium. In NC it is paid out of that same escrow account, but you have the right to choose your insurance company. I recommend to clients that they shop their home owners insurance at least every 2 years to be sure you are getting the best rate for the same coverage. A good independent insurance broker may be able to save you money that can minimize your escrow jumps. As well, some home owners choose to take a higher deductible per covered event knowing that it will lower that annual premium. Finally, while it is a painful payment shock, this is being driven by your town and county raising your tax base and/or rate. Wake County just announced they are re-assessing property every 2 years now, so this could become a more regular event. Talk to your town council and county supervisors and let them know higher taxes are not in your budget, and that you vote.