Hi, there, everyone. I've got a question regarding escrow accounts (or at least mine). I'm aware of what they do, you pay extra every month to save for taxes, insurance and mortgage insurance, if you have it. I have a question, though, about the amount of money that goes into it.
I received a statement a week ago telling me that my escrow payment was going to go down $55 a month starting in August. I was reading further into the whole thing, and apparently there will be a shortage of some money at one point during the next year, they predicted, so it will go down $55 only, not $70. While that all makes sense, what didn't was the fact that they estimated that my lowest monthly balance before the correction was still like $200. In other words, the way it looked to me, the escrow account, at its lowest was roughly $200, but that's not good enough, and it needs to be 350 or so.
My questions are first, why is $200 extra not enough, and also what happens to this extra money each month after my mortgage is paid off? Do I get reimbursed the excess, or does the bank keep it? Also, since I am forced to keep more in the account than I need to cover the bills, next time I take out a mortgage (if that happens), would you guys recommend avoiding a PITI loan, since I'm sure I could find a better use for the excess money than it sitting, not doing anything?