Vent--underestimating escrow costs

[tvguy]

I pay $11,000+ on my 1800 square foot home, on a small lot. Honestly, I don't know how we could fit in a smaller home. I still pay $500+ a month for gas and electric, although we don't have central a/c.

And my escrow is off every single year, and my mortgage goes up.

In California property taxes are 2% of what you paid for your house, with a small increase, I believe 2 % allowed a year. This went into effect with the passage of Proposition 13 back in 1978. But with the price of houses falling, many got their assessments lowered. Now, as prices recover, they are going up.
So this benefits long time homeowners who lock in a tax rate. I just sold my parents house for $600,000. Because they owned if 53 years, the property tax was $1,100 a year, half what I pay on a house worth half as much. The new owners property taxes will be $12,000 a year.

The driving force behind the cap on property taxes imposed by Prop 13 was you literally had people like my parents, being asked to pay more per year in property taxes, that they had actually paid for the house decades earlier.

 

[ruadisneyfan2]

I pay $11,000+ on my 1800 square foot home, on a small lot. Honestly, I don't know how we could fit in a smaller home. I still pay $500+ a month for gas and electric, although we don't have central a/c.

And my escrow is off every single year, and my mortgage goes up.

We feel tight with only 2 kids. I'd say I don't know how you do it but we all do lots of things when we know it's just what we have to do. I have a coworker who grew up in a family of 6 girls and 1 boy in a 3Br/1bath house. The boy had his own room and the girls shared the largest bedroom with 2 sets of triple bunk beds.

 

[jgates]

Always check your annual insurance statement for your homeowners - many people have premiums that increase dramatically because of changes in credit scores, etc. If you don't pay attention to that disclosure from the insurance company, you may not even realize you are paying a ton.

My boss got a rate increase for homeowners & it was because of a few recent credit checks affected score. Turned out I believe that I think it was the dealer & the bank both checked credit score for loan or something along those lines. Once he explained why there were multiple inquiries that temporarily affected score, they dropped premium again.

But if you don't watch it, you could overpay.

 

[disneychrista]

I would expect this nearly every year. Insurance goes up. Property tax goes up. Of course escrow will go up too. Just think about it if you were renting your rent would be going up every year too.

 

[nunzia]

This has happened to us many times also when we had a mortgage. It seems like a worse problem then it was years ago..our mortgage payments used to be stable. Now it's as bad as renting in a way, where you really can't count on your mortgage payment remaining the same..it goes up every year just like rent would and my kids are finding it very frustrating.

PS.. I cannot get over the outrageous property tax bills so many pay..I have an 1,800 sq ft house and our YEARLY property tax is under $600. I'd rent if my taxes were as high as many. Ridiculous..

 

[shoney]

This has happened to us many times also when we had a mortgage. It seems like a worse problem then it was years ago..our mortgage payments used to be stable. Now it's as bad as renting in a way, where you really can't count on your mortgage payment remaining the same..it goes up every year just like rent would and my kids are finding it very frustrating.

PS.. I cannot get over the outrageous property tax bills so many pay..I have an 1,800 sq ft house and our YEARLY property tax is under $600. I'd rent if my taxes were as high as many. Ridiculous..

Renting wouldn't solve the problem. The homeowner still has to pay the taxes and then he/she passes the cost on to the renter. I just googled house rentals in our school district and there were a few. 3 or 4 bedroom houses are going for $2400.00 to 3100.00 per month.
I would rather buy a house and pay the taxes then throw the money out the window on rent.

 

[Anne34]

We pay our own property taxes also. It makes it much easier


Our previous house was around 2,000 sf and our property taxes were just over $9,000/yr. we moved a 3 years ago and currently rent out the house. We get $2200/mo. We are in a good school district in the Chicago suburbs. The house is 16 years old and we had many people try to rent it and were very picky with who we picked. Our current house is larger, along with higher taxes

 

[mm1971]

So, apparently our mortgage company underestimated our escrow costs and sent us a letter today saying we can either pay $663 or pay $55 extra a month on our mortgage. You would think they would err on the side of caution when they estimate taxes and such for the year. Anyway, my first reaction was, "Guess we'll have to cancel the Disney trip" since I'm Mrs. Gloom and Doom like that. We definitely can't pay the full amount out of pocket right now, because we have several things going on in the next 3 months--medical bills, my sis's wedding and costs associated with that (me, my husband, and our sons are all in the wedding), DS1's bday, and our Dis trip (which is 95% paid for, except for part of the gas/spending money). Now, that I think about it, $55 extra a month isn't terrible; I'm just really annoyed because it seems like every day brings some kind of new bill. Agh! I guess it's just life. On the other hand, if we cancelled our trip, we could pay the medical bills and escrow in full. How many memories would that make, though? *le sigh*

Happens every year on our mortgage. It's basically due to not knowing the tax increases. We just verify with our statements and send them a check to keep our payments the same. We were shocked the first time and then kind of planned for it after that. I think our adjustment is usually around $200 a year or so.

Good luck with getting through all of the expenses. I would suggest putting a little away at a time to offset what will inevitably be another adjustment next year.

 

[lauradis]

north state property taxes always make me glad i live in frozen ohio, 1800 sq ft house worth 215k taxes are only 2400 year and 900 for insurance

What would really scare me is if the taxes went down, because that means the city cut fire, police or road department.

 

[nunzia]

Renting wouldn't solve the problem. The homeowner still has to pay the taxes and then he/she passes the cost on to the renter. I just googled house rentals in our school district and there were a few. 3 or 4 bedroom houses are going for $2400.00 to 3100.00 per month.
I would rather buy a house and pay the taxes then throw the money out the window on rent.

well, good point! I am older and now find that if I decided to leave my house I'd get a small apartment.

 

[davedmaine]

So, apparently our mortgage company underestimated our escrow costs and sent us a letter today saying we can either pay $663 or pay $55 extra a month on our mortgage. You would think they would err on the side of caution when they estimate taxes and such for the year. Anyway, my first reaction was, "Guess we'll have to cancel the Disney trip" since I'm Mrs. Gloom and Doom like that. We definitely can't pay the full amount out of pocket right now, because we have several things going on in the next 3 months--medical bills, my sis's wedding and costs associated with that (me, my husband, and our sons are all in the wedding), DS1's bday, and our Dis trip (which is 95% paid for, except for part of the gas/spending money). Now, that I think about it, $55 extra a month isn't terrible; I'm just really annoyed because it seems like every day brings some kind of new bill. Agh! I guess it's just life. On the other hand, if we cancelled our trip, we could pay the medical bills and escrow in full. How many memories would that make, though? *le sigh*

They don't control insurance rates or taxes. It's not unusual at all

 

[taaren]

Wow, OP, that really sucks. They've adjusted our escrow amount several times in the 6 years since we bought this place. First it was high, so it went down, then it was too low so it came back up the next year. They left it alone for a few years, then this year I got a letter that stated because the property value was so much less than we paid for it on January 1, 2013, our property taxes are going down for 2014. Problem is housing prices in this area have skyrocketed since January as there's been a huge amount of people buying homes for cash all of a sudden, so I know when they reevaluate on January 1, 2014, our property taxes will go up again for 2015 and thus our escrow. I wish there was a mechanism by which they could just not have these yoyo-ing prices on our home.

 

[ruadisneyfan2]

Wow, OP, that really sucks. They've adjusted our escrow amount several times in the 6 years since we bought this place. First it was high, so it went down, then it was too low so it came back up the next year. They left it alone for a few years, then this year I got a letter that stated because the property value was so much less than we paid for it on January 1, 2013, our property taxes are going down for 2014. Problem is housing prices in this area have skyrocketed since January as there's been a huge amount of people buying homes for cash all of a sudden, so I know when they reevaluate on January 1, 2014, our property taxes will go up again for 2015 and thus our escrow. I wish there was a mechanism by which they could just not have these yoyo-ing prices on our home.

NJ has one. It's called "Never Lower Property Taxes".

 

[undertheradar]

Honestly, the OP is stating reasons that paying the entire shortage is not possible now. Anyone who does not escrow needs to be disciplined enough to put these monies aside monthly, just as escrow is designed to do. This will vary for each homeowner.

 

[Howgreat]

Yeah, we just decided to take the $55/month increase. Even if we paid the shortage, our mortgage payment would still go up $12/month. It's not our homeowners insurance because we switched several months ago and significantly lowered our payment. We've been in our house for 5 years and its actually gone up once, down once, and now up again. It's only $60 from where we started 5 years ago. Not bad, looking at some of the other posts.