An escrow shortage is when there is a negative balance in the escrow account and not enough money to pay your bills plus maintain the required cushion. The most common reason for an escrow shortage is an increase in property taxes, which results in an increase to the escrow payments. Other possible reasons for escrow shortages include a rise in homeowners insurance and a miscalculation of the escrow payment when the home loan was originally started.
Make a down payment on a house
If you are considering buying a house, this could be an excellent time! Use your tax money toward a down payment on a new home. The more money you can put down, the less you will have to finance, which could allow you to have a lower monthly payment or buy a higher priced home.
A pre-approval is determined after the lender’s more in-depth analysis of the borrower’s income, expenses, assets, liabilities and credit score. Generally, documentation is provided by the borrower for all of the above items so that the lender can verify all of the information that was provided verbally at the pre-qualification stage.