If you own a home, you have certainly felt the loss in its value of the last few years.  But, there is a silver lining.  Mortgage escrow for property taxes, and home owners insurance.  While home values have decreased, your payments in those areas has not adjusted as quickly as falling home values, but with two phone calls, you can update them now and make three valuable changes.

Here’s a detailed explanation:

First thing is home owners insurance.  I saw mine steadily increase over the years, and since the falloff in home value I started to wonder, why are my insurance premiums increasing when the value of my home is decreasing?  So I called my insurance company and posed the question to them.  They looked at the current structural assessed value and updated it (lower), as well as a review of my account.  After the call which lasted about 10-15minutes, my semiyearly payment decreased about 26%.  chaa ching!

Second, property tax escrow with my mortgage company.  So, with the decrease in value of my home, my tax payments, were also decreasing, yet I was paying into escrow based on old assessments.  Here I got two benefits.  First, I had the current payments in to escrow adjusted based on current tax payments, this didn’t yield a lot, since they were only about 5 months of assessed value behind, but did lower my monthly payment about $15.  No big deal, but it adds up, and that’s where my third change comes in, and that was substantial.

So over the term of my mortgage I’ve been making all these escrow payments where the updates to the tax assessments have been lagging.  Well turns out that I had accumulated about 1k worth of extra funds in my escrow.  Money that just sat in the account, and made me no money, and with inflation, even decreased in value over time.  So I instructed the rep to apply it to my next months mortgage payment.  Done.  That call took only 10 minutes, including the payment adjustments.  I’d recommend keeping your online account history open, and noticing your escrow balance after tax (and for some insurance) payments are made.  Whatever is left over, is your surplus funds that just sit there.  You can apply them to your principle balance, or your next payment (the better option since paying down the interest payments doesn’t adjust until you refi or your ARM re-adjusts).

I spent more time writing this blog post, then it actually took me on those two phone calls, but I hope that others can benefit from those free and easy adjustments as well.  It pays to stay on top of your finances