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So DH and I got a letter from our bank/escrow company. Apparently the numbers they had been using to calculate our escrow were off...very off. From the looks of it they just chose an escrow payment rather than calculating it based on our actual tax burden. So they gave us two options, pay the $2300 now and our mortgage payment stays about the same or pay the increased amount each month ($200 more). I guess they have a third option of paying some then having a lowered monthly payment. DH and I are going keep our money working for us as long as possible, and pay the higher monthly amount. It's hard because at the old price our mortgage was the same as our rent payment had been so buying made a lot of sense, but now it will be at least $200 more. Welcome to home-ownership!
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This is why we got rid of our escrow account years ago. We found out ours had a surplus of $900 of our money they kept in there. I decided that was too much for them to be making interest on. We just pay our taxes and insurance ourselves. -
That has happened to us several times since buying our house. Of course, there have also been a couple of times when we were notified that our escrow account was over-funded and they reduced our monthly payment. I know I should just get rid of it entirely and pay the bills myself but I've never bothered to do that.Steve
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When online banks were paying 5% this was a big deal - at 1% not so much. We recently bought so we had to go back to escrow to get a quarter point discount at the loan origination - this thread has reminded me I should send a letter in to the mortgage company to get my escrow money back.
Fortunately (???) - the home depreciation has actually reduced our mortgage payments the last two years.Comment
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I stopped using escrow in order to shop my insurance yearly. I usually have to fax proof of insurance every year, but I've gotten used to the system.Comment
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How did you guys get out of your escrow account? Whenever I try, my mortgage company says I have to pay a fee (0.5% of the original loan?) to close it.Comment
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I think it varies by mortgage co. Some have a policy where they charge you more interest if you do not have an escrow account. Others will allow you to take care of your own if you meet certain conditions--such as a certain amount of equity in the home.Originally posted by JuniorTT View PostComment
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I figured it was something like that. We have plenty of equity (~45%) so I think my lendor is just being up tight. Actually, I should give it another try now that the loan was recently transferred to a different lendor.Originally posted by Like2Plan View PostComment
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Absolutely try again if you want to house your own escrow. On our last house, I just sent a letter after two years in the house - they reviewed and closed the escrow account (we had 20% equity). You do have to fax proof of insurance annually though or they will buy it for you - something no one wants!Originally posted by JuniorTT View PostComment
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escrow
in the stock market is always a risk to take but is worth that risk. escrow grows.Comment
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I used to work for a mortgage company and we occasionally had situations like this, in which some kind of screw up caused the customer's escrow payment to increase to a level that caused a hardship.
There were some cases where we agreed to spread the deficit out over two or more years if necessary. They can do it, so if you are having a real hardship, and the mistake was on their end or was something out of your own control, then be sure to push to have it spread out over 24 months at least.Comment
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kt,Originally posted by ktmarvels View Post
If your escrow was short $2,300 your payment should be going up about $192 per month ($2,300/12 months) to ensure you don't have this happen again next year. Many mortgage companies will increase your house payment by double that amount for 12 months to repay the escrow shortage (this is an interest free 12 month loan).
Did you buy a new construction home where the taxes were predicated on the previous year when it was assessed as a vacant lot? That could explain the shortage.
Did your mortgage company and/or real estate agent not make you aware of what your payment should have been? They should have so you would have been prepared for this shortage.
If you have the money to pay the $2,300 in cash, then I would try to make the higher payment for 12 months to take advantage of that interest free loan, if you can't swing that much of a higher payment then perhaps consider tapping into those funds that you have (that you don't want to touch) or find ways to cut back on your other expenditures.
Did you get a big tax refund this year? Have you calculated what it might be with the a full year of the new home factored in? You can go to the IRS site (sorry I can't post a link yet I'm still a newbie) and it will show you how to adjust your withholdings with your employer to increase your take home pay (an lower your tax refund next year). This might help to ease the burden of the additional payment.
Hopefully you had figured the actual taxes into your monthy house payment so the total house payment is still within your comfort zone.
Hope this helps.Comment
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This is normal. Part of this could be the timing of when you closed.Originally posted by ktmarvels View Post
We closed on house in Dec of 2005, then refinanced in April of 2006. At time of refi, the broker was able to tell me
a) at that time escrow was $X and that would be transferred
b) in about 6 months I would receive a huge check as a refund from escrow
c) in about 12 months a smaller check would come (as escrow flattened out)
that all happened as he stated... based on when you close, and how they "fund" the escrow, my reading suggests it takes the bank 2 years sometimes to get the escrow right.Comment
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ktmarvels,
Sorry your escrow is all messed up.
The taxes can go up or down and you don't have any control over that. But, what you do have control over is figuring out whether escrow will cover your tax/homeowner ins. If there is going to be ahortfall, you can set aside some additional money in your budget (an escrow shortfall budget category). When the bank gets around to figuring it out, you have money set aside so that you are not playing catch up.
I ususally have a good idea as to what my property taxes are going to be in Jan when the County mails out the property assessments. But, I don't have an escrow account anymore so I have to make double sure there is not going to be a shortfall.
Here's a link to FAQs About Escrow Accounts for Consumers
There is a learning curve to all of this--before you know it, you'll get out ahead of the bank..Comment
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Thanks for that link. I am beginning to consider re-financing to escape escrow, consolidate my HELOC into my mortgage, and get a lower interest rate. If I can do all of that, it might be worth the fees and paperwork.Originally posted by Like2Plan View Postktmarvels,
Sorry your escrow is all messed up.
The taxes can go up or down and you don't have any control over that. But, what you do have control over is figuring out whether escrow will cover your tax/homeowner ins. If there is going to be ahortfall, you can set aside some additional money in your budget (an escrow shortfall budget category). When the bank gets around to figuring it out, you have money set aside so that you are not playing catch up.
I ususally have a good idea as to what my property taxes are going to be in Jan when the County mails out the property assessments. But, I don't have an escrow account anymore so I have to make double sure there is not going to be a shortfall.
Here's a link to FAQs About Escrow Accounts for Consumers
There is a learning curve to all of this--before you know it, you'll get out ahead of the bank..Comment
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