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Once a year, you get an escrow statement from the mortgage company for every property that you own. The document shows you how much you paid in taxes that year. Based on how much you paid, you find out how much your new escrow payment is. Trying to understand how they get that number is pretty difficult, and most people just buy that what they’re told is true. But you really should try to understand what the statement says. Mortgage companies traditionally “over escrow.” You take your real estate taxes plus your insurance and you add them up. Then divide by 12. Then, mortgage lenders are able to take an additional 16 percent in overage. So, that total is what they should take from you each month. Also, HUD the Department of Housing and Urban Development has a display on its site that helps explain everything http://www.hud.gov/offices/hsg/sfh/res/respafaq.cfm
Keep in mind, also, that in the mortgage business, mortgage lenders forget to pay your taxes on time. Penalties and interest can accrue because of that. So, banks often debit your escrow account for any extra charges and fees that they forgot to pay. It happens all the time and it’s your money. Your bank owes you that money.
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