My mortgage has a large escrow balance due. What does it mean?

It’s likely your taxes and insurance went up, and the escrow you were paying monthly was not sufficient to cover the cost when they were due. In that case, your lender may have paid them for you, leaving your escrow with a negative balance. Lenders want escrow balances to always have at least a two month cushion for taxes and insurance, specifically for situations where those items go up. Once the balance goes under the two month level, borrowers get an insufficent escrow notice and bill. You usually have the option of paying the shortfall in one payment or over time. It is important to note that even if you pay the shortfall in a single payment, your new escrow payment will still increase to cover the increased cost of taxes and insurance.