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Escrow question- possible money board

Posted on 1/21/16 at 5:06 pm
Posted by 610man
Louisiana
Member since Jun 2005
7343 posts
Posted on 1/21/16 at 5:06 pm
I will ask the o-t though, sure I will get good answers. Got a surplus check from my mortgage company. So as a new homeowner, I called them to see what was up. They Said they had set a certain amount aside for taxes for last year and the taxes that were assessed where way less, couple hundred dollars. Bought a newly built house last year, so the reason the taxes were low, is because the house wasn't there at the time the value was assessed, just the land. So my mortgage payments will now be lower based off of the taxes for last year, however those taxes will go up and be higher, because now there is a house there. So my question is shouldn't I just tell the mortgage company to keep the payment the same it is now and not lower the payment? That way the correct amount will be taken out of my mortgage every month, not the amount based off of last years taxes. Thanks.
This post was edited on 1/21/16 at 5:07 pm
Posted by GRTiger
On a roof eating alligator pie
Member since Dec 2008
63025 posts
Posted on 1/21/16 at 5:12 pm to
This is one of the drawbacks to escrow. I don't believe they will keep it just in your request (I could be totally wrong). Your best bet would be to set aside the money they returned plus whatever amount above that you can best guess it will take to cover taxes, because they very likely will ask for the balance, if not raise your note for the next year.
Posted by Zappas Stache
Utility Muffin Research Kitchen
Member since Apr 2009
38690 posts
Posted on 1/21/16 at 5:13 pm to
quote:

So my question is shouldn't I just tell the mortgage company to keep the payment the same it is now and not lower the payment? That way the correct amount will be taken out of my mortgage every month, not the amount based off of last years tax


Yes. Don't let them lower your payments if you know the taxes will be more next year.
Posted by DoctorO
BTR
Member since Jun 2010
274 posts
Posted on 1/21/16 at 5:15 pm to
You can apply it to your principal or back into escrow for future tax/insurance increases.
Posted by Nado Jenkins83
Land of the Free
Member since Nov 2012
59654 posts
Posted on 1/21/16 at 5:15 pm to
quote:

Yes. Don't let them lower your payments if you know the taxes will be more next year.


I agree.
Posted by 610man
Louisiana
Member since Jun 2005
7343 posts
Posted on 1/21/16 at 5:16 pm to
Apply the extra that will be there, because I will technically be paying extra. Is that what you're saying.
Posted by Zappas Stache
Utility Muffin Research Kitchen
Member since Apr 2009
38690 posts
Posted on 1/21/16 at 5:16 pm to
quote:

Your best bet would be to set aside the money they returned plus whatever amount above that you can best guess it will take to cover taxes, because they very likely will ask for the balance, if not raise your note for the next year.


Once you have an escrow shortage, they can legally collect an extra amount of something like 10%. So you would have to make up the shortage plus their BS "cushion factor". I've been through that.
Posted by 3deadtrolls
lafayette
Member since Jan 2014
5703 posts
Posted on 1/21/16 at 5:31 pm to
Chase did the same thing my first year. The next year we were like $700 short on taxes. Instead of having my payment go up, I just paid the shortage.
Posted by 610man
Louisiana
Member since Jun 2005
7343 posts
Posted on 1/21/16 at 5:33 pm to
I'm fine with continuing to pay what I pay now, which is based off of what taxes will probably be, instead of lowering my payments. I'm gonna call mortgage company tomorrow.
Posted by DoctorO
BTR
Member since Jun 2010
274 posts
Posted on 1/21/16 at 6:38 pm to
Yes, cash the check and reapply to your mortgage where you see fit.
Posted by DoctorO
BTR
Member since Jun 2010
274 posts
Posted on 1/21/16 at 6:42 pm to
quote:

Apply the extra that will be there, because I will technically be paying extra. Is that what you're saying.


This is aal a result of the 2008 financial cris. They don't want to let the mortgage companies like Citi have too much of the consumers's money so they make them give back the excess every year.
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