You signed a fixed rate mortgage. The interest rate has not moved. Then a letter arrives from your servicer and the monthly payment is higher, sometimes by a lot. Almost every new owner in Monroe County who calls me about this is looking at the same thing: an escrow analysis with a shortage on it.

This post explains where that shortage comes from, why local tax bills make it so common here, why the increase often looks bigger than the underlying tax change, and what you can actually do about it. No numbers are invented. Your own statement and your own tax bills are the only figures that matter, and I will show you where to find them.

What actually changed: the loan or the escrow?

The escrow account changed, not the loan. Your monthly payment has two parts. The first is principal and interest, which is fixed if you have a fixed rate loan. The second is the escrow portion, which is one twelfth of what the servicer expects to pay out over the next year for property taxes and homeowners insurance, plus a small cushion.

Escrow is not a fee. It is a holding account. When the projected bills go up, the escrow portion goes up. When the account has already fallen behind, you also repay the gap. That second piece is what people mean by an escrow shortage, in New York and everywhere else.

Why does escrow jump most in the second year in Monroe County?

Because the first year was an estimate, and here the estimate is usually low. At closing, the lender sets up escrow using the most recent bills available, which are the bills the previous owner received. That figure can be wrong for several reasons at once:

• Two or three separate tax bills. In most of Monroe County you get a combined town and county bill at the start of the year, and a separate school tax bill in the fall. If you live in a village such as Honeoye Falls, Pittsford or Scottsville, there is a village bill too. The school bill is often the largest of them.
• Your closing date split the tax year. If you closed in spring, the seller had already paid part of the year and you were credited or debited at the settlement table. The lender only began collecting from your closing date forward, so the account started thin.
• Exemptions that belonged to the seller. A senior, veteran, agricultural or Enhanced STAR reduction on the prior owner's bill does not transfer to you. The bill the lender copied was smaller than the bill you will receive.
• The assessment changed. Towns update assessment rolls. A sale, a permit, or a townwide reassessment can move the assessed value that every one of those bills is calculated from.
• Insurance renewed. Your first policy premium was locked in before closing. The renewal quote arrives twelve months later and the servicer escrows the new number.

STAR: the New York reason people miss

Basic STAR works differently for recent buyers than it did for long time owners. Many long time owners still have STAR applied as an exemption that reduces the school tax bill itself. Newer owners generally receive STAR as a credit from the New York State Department of Taxation and Finance, paid to you separately, rather than as a reduction on the bill.

The practical effect on escrow is simple and surprising. Your school tax bill shows the full amount. Your servicer escrows and pays the full amount. The STAR benefit comes back to you directly, not to the escrow account. So the escrowed figure can rise even if your net cost is similar to the seller's.

If you have not registered for the STAR credit, do it. You register once with the state, not with your town, and you do not need to reapply each year. Also confirm with your town assessor whether you qualify for any other exemption in your own right.

Why a shortage raises your payment twice

This is the part that catches people. When the servicer runs the annual analysis, it does two things at the same time:

1. It resets the monthly escrow deposit to cover the new, higher projected bills.
2. It collects the existing shortage, usually spread over the next twelve months, and rebuilds the cushion the loan allows. Under federal escrow rules, a servicer may hold a cushion of up to two months of escrow payments.

So a tax increase of a given size can show up as roughly double that amount per month for one year, then settle back down once the shortage is repaid. Say the statement shows a shortage of $1,200, which is an illustration and not a local average. Spread over twelve months, that is $100 a month on top of whatever the new, higher escrow deposit is. Next year, if the bills hold steady, that $100 comes off.

How to read your escrow analysis statement

The statement is dry but it is honest, and every line is checkable against a document you can obtain.

Servicers do make mistakes. The most common ones I see are paying a bill for the wrong parcel, escrowing a village bill twice, missing a paid installment, or projecting a school tax figure from the wrong district. If a number does not match your paper bill, call and ask them to show their source.

What can you actually do about an escrow shortage in New York?

You have four real levers, and none of them involve refinancing.

• Pay the shortage as a lump sum. Most servicers allow this. It removes the repayment portion from your monthly figure immediately. It does not lower the new escrow deposit, because that reflects the bills themselves.
• Register for the STAR credit if you have not, and ask your assessor about any exemption you qualify for personally.
• Look at your assessment. The tentative assessment roll is published in the spring and each town holds a grievance day, generally in late May. Dates and procedures vary by town, so confirm with your assessor's office. If your assessed value is above what the house would sell for, bring your closing statement and comparable sales.
• Shop the insurance. This is the fastest lever. Get two or three quotes at renewal, confirm the coverage matches, and send the new declaration page to the servicer so escrow is recalculated.

Buying now? Ask these before you close

The way to avoid a year two surprise is to budget from the bills you will receive, not the ones the seller received. Before closing, ask for:

• Copies of the current town and county bill, the school bill, and any village bill, not a summary
• Whether any exemption appears on those bills, and whose it is
• The assessed value and the date of the town's last reassessment
• Whether the house has recent permit work that has not hit the assessment roll yet, which is common with new construction and large additions
• A written insurance quote, not a placeholder figure

For context on price levels while you budget, the Monroe County median listing price was $319,900 in May 2026 according to Realtor.com data published through FRED. That is a listing figure, not what homes sold for, and taxes are calculated from your assessed value rather than from any county median.

I do not have reliable town level escrow or tax rate figures for Henrietta, West Henrietta, Pittsford, Brighton, Mendon, Rush or Honeoye Falls to publish here, and I am not going to estimate them. What I can do is pull the actual bills for a specific address and walk the numbers with you.

Common questions

Can my escrow payment go up if I have a fixed rate mortgage?

Yes. A fixed rate locks the principal and interest portion only. Property taxes and homeowners insurance are not fixed, and the escrow portion of your payment tracks them every year. This is why a fixed rate loan can still have a payment that changes annually.

Should I pay the escrow shortage in one lump sum or spread it out?

Paying it as a lump sum lowers your monthly payment right away and costs you nothing extra, so it is usually the better choice if the cash is available. Spreading it over twelve months is interest free at most servicers, so there is no penalty for choosing that instead. Either way, understand that the underlying escrow deposit will stay at its new, higher level.

Why did I get a STAR check instead of a lower school tax bill?

Recent buyers generally receive the Basic STAR benefit as a credit paid by New York State rather than as a reduction applied to the school tax bill. Your bill and therefore your escrow show the full amount, and the benefit reaches you separately. You register once with the state tax department, and you do not need to reapply annually.

Can I cancel escrow and pay the taxes myself?

Sometimes, depending on your loan type, your equity position and your payment history. Government backed loans are generally stricter than conventional ones. Before you ask, be honest about whether you will reliably set aside money for a large school tax bill and a separate town and county bill, because a missed tax payment is a serious problem for the lender and for you.

Does a higher escrow payment mean I overpaid for the house?

No. It usually means the first year's escrow estimate was built on the prior owner's bill and exemptions. Assessment and exemption changes after a sale are routine in Monroe County and they say nothing about whether your purchase price was reasonable.

If your payment changed and the statement does not add up, send it to me along with your address. I will pull your tax bills, check the projection line by line, and tell you plainly whether the servicer got it right. Book a time with Khem Kadariya and bring the letter.

About this data

The figures in this post were compiled from publicly available sources including FRED (Federal Reserve Bank of St. Louis), Redfin, Zillow, Houzeo and RochesterFirst, along with other public market data. Real estate numbers change quickly, and these were accurate as of September 2026. For current figures on a specific home, street, or town, ask me directly rather than relying on a published average.