For the first time since we closed on the Cape, a letter from our mortgage servicer made the payment smaller. It came on Friday, August 21, and I read it twice standing at the kitchen counter before I believed it. Starting with the October 1 payment, we'll pay $1,929 a month.
A year ago, it went the other way
Last August's escrow letter was the one that raised our payment by $271. Michigan property taxes are capped while you own a house and uncap the year after it sells. The sellers had owned the Cape since 1988, so their taxes were about $2,450 a year. Ours jumped to $4,380 in 2025. The escrow account had been collecting based on the old number, so it came up $1,452 short.
We chose to spread that shortage over twelve months instead of paying it in one lump, which added $121 a month. Our payment went from $1,856 to $2,127 last October. Then in June our servicer approved dropping PMI after a new appraisal, and $96 came off starting with the July payment, which took us to $2,031. That part took a $575 appraisal in May, which came in at $292,000 and put our balance at about 74 percent of the new value. Our servicer required two years of on-time payments and no more than 75 percent, and we cleared both by a little.
What I didn't understand at closing is that the payment on our paperwork was built on the sellers' taxes, not ours. Nobody hid that from us. I just didn't know to ask, and the first escrow letter was how I found out.
The new letter, line by line
Here's what makes up the new $1,929:
- Principal and interest: $1,449, the same as it's been since day one.
- Property taxes: $375 a month, based on about $4,496 for 2026 (the $3,010 summer bill paid in July plus a winter estimate of $1,486).
- Homeowners insurance: $105 a month, from our $1,259 renewal on July 1.
- Shortage: none. The last $121 installment goes out with the September payment.
- PMI: none.
The letter also projected a small surplus, and an $86 check is supposed to follow. I checked each line against the summer tax bill and the insurance declarations page, and they matched to the dollar, which is my favorite kind of boring.
The analysis itself is two pages: what went in and out of escrow over the past twelve months, and a projection for the next twelve. The history page shows the insurance renewal and the summer tax bill leaving within about two weeks of each other in July, $4,269 in one stretch, which is the low point for the account every year. As I read it, the servicer sizes the monthly deposit so the balance never dips below a small cushion at that low point, and when the projection comes out above that, the extra comes back as a check.
Taxes only went up $116 for the year this time. Our taxable value went from $125,000 to $128,900. The February assessment notice put a much bigger number on the house, but as I understand it, the cap on taxable value is what drives the bill while we own it. The assessor's office is the place to ask how that works for any particular house.
Down, but not back to where we started
Put in one line, our payment has gone $1,856 at closing, $2,127 last October, $2,031 in July and $1,929 this October. That's $198 less than last year's peak and $102 less than what we pay right now. It's also still $73 more than the day we closed. "Finally went down" is true. "Back to normal" isn't, because the old normal was built on someone else's capped taxes.
Tessa's reaction was immediate. "Pretend it's still $2,127," she said. So that's the plan. The same amount will leave the joint account every month, and the $198 difference goes to savings until the $4,500 we took out for the furnace is back. The $86 check, whenever it shows up, goes into the house fund. That's what works for us, and it isn't a plan for anyone else's money.
There's already a row in the house sheet for August 2027 with a question mark in it. Insurance renews again in July, the 2027 tax bills will be whatever they are, and I've learned not to assume an envelope from the servicer is good news until it's open.
