I have always hated escrow accounts for this very reason. They make you keep an exorbitant amount of “extra” in the account because they never want to pay any of your bills out of pocket and then wait for you to make it up.
Since you have been paying escrow regularly for 4 years, you could see if they will let you pay the taxes and insurance yourself. You will need to supply your mortgage company with the receipts showing that they amounts are paid – but that is much easier, in my opinion, than dealing with the frustration of paying them.
As regards the flood insurance, I am not sure. You should check in your mortgage documents to see what is required. I do not believe they can insist on flood insurance if you are in the 100 year flood plane.
Hi, Lenders are required to follow strict federal regulations on escrow accounts. The target is 2 months' extra reserves at the low balance each year. If you end up with less than two months' balance (or a negative balance!) due to increased taxes and insurance, you are given the option of either paying the prior shortfall or adding it to your next year’s payments. Of course, that’s just the shortage part, even if you write a check for that, your payment will increase by the amount of any tax/insurance increases regardless. On the plus side, if your escrow ends up with MORE than 2 months' cushion at it’s low point of the year, you get a check back. Needless to say, this happens far less often than escrow shortages since taxes and insurance invariably rise more than they fall. As far as the flood insurance, FEMA determines flood zones, not lenders. There is a flood zone disclosure in all loan closing packages, you may want to take a look at that for more details. It doesn’t matter to FEMA (or lenders) if your home has flooded, if FEMA says you’re in a flood zone, you’re required to buy flood insurance. Coverage cost do vary by flood zone, so hopefully you’re at least in the smaller risk category. Hope that helps! Ted