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The part nobody warns you about

Why your Michigan mortgage payment jumps in year two

Uncapping doesn't just raise your tax bill — it drains your escrow account. Most lenders set escrow from the seller's old capped bill, which is underfunded the moment the value uncaps. A year later you get a shortage notice and a payment increase in the same envelope. Here's your number.

By Cyrus Wheeler, Broker/Owner · Updated · Michigan Dept. of Treasury 2025 Total Rates

Buyer Tool

Escrow shortage & payment shock calculator

Built on the official 2025 state millage rates for all 236 Southeast Michigan municipalities. Assumes a homestead (primary residence) rate.

Auto-filled from the official 2025 state report.
On the listing or the assessor's site. Not the same as market value or SEV.
Most do the first, and it isn't technically wrong — your first-year bill really is the seller's capped amount. It just guarantees a shortage the following year unless someone plans for it.
Your year-two payment increase
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—
Escrowed monthly, year 1—
What it needs to be—
Underfunded each month by—
Shortage after 12 months—
Cushion top-up (2 months)—
Year 1 escrow portion—
Year 2 — higher bill—
Year 2 — shortage repayment—
Year 3 onward—
Why it's a double hit: at the escrow analysis your servicer raises the monthly payment to cover the higher ongoing bill and spreads the accumulated shortage over the next 12 months. Year two carries both. Year three drops back to just the higher bill.

Get ahead of the shortage

We'll put the uncapped figure in writing before you close, so whoever handles your loan can set escrow on the right number from day one.

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Common questions

Why did my mortgage payment jump in year two?

Your lender set the initial escrow deposit from the seller's capped tax bill. After Michigan uncapping, the real bills came in higher, the escrow account ran short, and the lender now collects last year's shortage and a higher monthly deposit at the same time — a double hit in the same statement.

How big can an escrow shortage get in Michigan?

It scales with the gap between the seller's taxable value and half your purchase price, times the millage. A $100,000 gap in a 40-mill district under-collects about $4,000 a year — and the repayment plus the corrected deposit can raise the monthly payment by several hundred dollars.

Can I avoid escrow shock?

You cannot avoid the tax, but you can avoid the surprise: give your lender the uncapped estimate at closing and ask them to escrow against it from day one, or set the difference aside yourself until the corrected bills arrive.

Does the higher payment last forever?

The shortage repayment, usually spread over 12 months, drops off after a year. The higher escrow deposit remains, because it now reflects what the house actually costs in tax.

More tools

Every number you need, before you sign

Tax Uncapping

What your taxes actually become after closing.

Seller Net Sheet

Net proceeds after transfer tax, commission and payoff.

Affordability

True monthly payment with uncapped Michigan taxes.

Property Tax

This year's bill from official 2025 millage for your exact district.

Transfer Tax

What the seller owes the state and county at closing.

Tax Appeal

Are you over-assessed, and would appealing actually save you anything?