Last week, I talked about the reasons why you may have an escrow shortage. Today, I will discuss some of payment options you have if you do have an escrow shortage.
Hopefully you will never receive an escrow shortage letter ever in your life, but if you do, hopefully you will have the funds to pay the shortage in full or the difference in your total mortgage payment is not significant enough to throw off your budget.
If you want to eliminate the shortage amount immediately, here are 2 options to consider.
Use funds from your savings to cover the amount of the shortage. When making the payment, make sure you designate the payment for credit to escrow. If you don't, they may apply the money to your monthly payment.
You can also hustle to come up with the difference. Typically your mortgage company will send the escrow shortage letter 2 months in advance, so you have time to come up with the increase. Below are a few things you can do:
Mow lawns (in the summer)
Find items around your home you no longer use and sell them.
Babysit
Freelance (if you have other skills)
Work overtime at your current job
Take your lunch and send the money saved to your escrow.
Uber/Lyft
Mystery Shop
Try to find a quick hustle that doesn't require you to spend extra money to get started. The point is to offset this extra expense as quickly as possible.
So how do you prepare for this in the future? By Saving!!! It's hard to prepare for the unknown but you're not going to be worried about it if you already have a savings cushion.
You can start saving by estimating based off of the previous amount or pick an amount that makes you comfortable.
Once you pick the amount, start saving 1/12 in an account each month that is not easy to access, like an online savings account. My mortgage has never increased, more than $5 a month, so I save an extra $10 each month and I keep saving that amount until I need it. It took me a while to figure out the best way to handle this but now I can say, saving the money, even if I did not need it has worked out in my favor.
What are other some ways you could earn some money for unexpected home expenses?
