Vent--underestimating escrow costs

[mikehn]

Every year your real estate taxes go up and/or your homeowners insurance goes up. So there is always going to be a shortage in your escrow every year. Although it can happen, it is very rare that your taxes or insurance goes down.

 

[gracie1]

I don't know if you can cancel once you have it but I can tell you that I'm on my 3rd house and have never escrowed. I would rather the money stay in my bank account and let me pay it then hope that some mortgage company estimated it right from year to year.

I was able to cancel it, but like I said I had to fax a letter to them, and the only reason they let me cancel is because I was outside the flood zone.
Yikes to the poster that went from $3200 to $8500 in taxes!! Ouch!! I live in Delaware and our property tax annually is under $650. And I complain about that!!

 

[drinkme]

I was able to cancel it, but like I said I had to fax a letter to them, and the only reason they let me cancel is because I was outside the flood zone.
Yikes to the poster that went from $3200 to $8500 in taxes!! Ouch!! I live in Delaware and our property tax annually is under $650. And I complain about that!!

WHAT!!! $650 a year? My monthly escrow is more than that.

 

[Claire&TheBoys]

Here in Florida (and some other states, too, I'm guessing), taxes are calculated in the summer and bills go out in November. What often happens when you buy a house is that the house has already had the tax bill calculated, so your escrow is based on what is coming up due that year. However, when the house is sold, it triggers a re-assessment of the value of the property. Here in Florida, the value of homesteaded properties can only go up a maximum of 3% per year, even if the actual value has increased a lot more. So, if a house has been owned for a long time, the assessed value may be much lower than the actual value and once that house is sold, the new assessed value is going to jump up to about 85% of the sales price. That means that in the 2nd year of home ownership, your property taxes often increase quite a bit.

We got a little lucky in buying our house, as it was a short sale and the previous owners paid more than $50k more for it than we did just a couple of years later. Our taxes dropped significantly the second year and we got an escrow refund of $1000.

 

[disney1990]

I don't know if you can cancel once you have it but I can tell you that I'm on my 3rd house and have never escrowed. I would rather the money stay in my bank account and let me pay it then hope that some mortgage company estimated it right from year to year.

Escrow is required in our area. I don't know if I would even suggest that most people NOT escrow. A lot of people are just not that disciplined and would end up short of funds. I can't imagine not being able to cover a shortage of less than $1000, but we are very money conscience.

 

[ruadisneyfan2]

WHAT!!! $650 a year? My monthly escrow is more than that.

Yeah I'm with you there. The good part is that our public schools are excellent and at least its deductible on our Fed tax return. The cost of private schools would not be.
My BIL/SIL moved from MD to Jacksonville, FL in 2006 and their homeowners ins is $7000. Either way you pay but ins. is not deductible.

 

[brertoad]

If your house is relatively new, perhaps try shopping around for a couple different insurance quotes to see if you can lower your insurance portion of your bill. If so, that would bring down the amount needed for escrow.

Also, as another poster suggested, if you check with your tax collector, you may be paying higher taxes if you home has not been reassessed (sp?) lately. After the housing bubble it took our county about 2 years to reduce taxes because they didn't want to surrender the added income from the inflated housing prices.

 

[scrapquitler]

Every year your real estate taxes go up and/or your homeowners insurance goes up. So there is always going to be a shortage in your escrow every year. Although it can happen, it is very rare that your taxes or insurance goes down.

This is exactly my experience. Our Escrow payment always increases every year because both the cost of Homeowners insurance and the amount of property taxes increase every year. Without fail. Guaranteed. Some years I pay the shortfall ip front and some years I don't, and our payment increases a bit. Just part of the facts if life.

 

[scrapquitler]

I was able to cancel it, but like I said I had to fax a letter to them, and the only reason they let me cancel is because I was outside the flood zone.
Yikes to the poster that went from $3200 to $8500 in taxes!! Ouch!! I live in Delaware and our property tax annually is under $650. And I complain about that!!

Seriously??? Do you pay a separate school tax? Ours is all rolled into one, and it costs us just under $5000 a year on a $200k house.

 

[gracie1]

Seriously??? Do you pay a separate school tax? Ours is all rolled into one, and it costs us just under $5000 a year on a $200k house.

Nope, the school tax and property tax are together. I pay $850 a year for homeowners insurance and the property/school tax is under $650 a year. I can't even imagine the costs that you all have!!

 

[jrw118]

I cannot believe some of these numbers. My homeowners is $1800 and my taxes are just under $15,000.

 

[mrsheppo]

Wow! I guess I'm extremely lucky. I just got my property tax bill today and it went up $32 from last year. Between my homeowners insurance and taxes, I only pay about $1,600 a year.

 

[ruadisneyfan2]

I cannot believe some of these numbers. My homeowners is $1800 and my taxes are just under $15,000.

I believe it. My friend a few miles away pays that. Some on her street are closer to $20k. That's why we stay in our little 1600 sf house. Bigger home means higher heat & AC bills, more maintenance, etc. I'm content. I don't want to be house poor.

 

[disney1990]

I believe it. My friend a few miles away pays that. Some on her street are closer to $20k. That's why we stay in our little 1600 sf house. Bigger home means higher heat & AC bills, more maintenance, etc. I'm content. I don't want to be house poor.

So hard to compare costs with a group like this, from all across the country. Tax rates and insurance rates vary so much.

 

[mjkacmom]

I believe it. My friend a few miles away pays that. Some on her street are closer to $20k. That's why we stay in our little 1600 sf house. Bigger home means higher heat & AC bills, more maintenance, etc. I'm content. I don't want to be house poor.

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.

 

[hsmamato2]

You can look into not escrowing at all and paying your own taxes and insurance - it won't lessen the total amount you are paying each year, but you won't get the surprise letter from the mortgage company. You might be surprised by the tax bill or insurance bill, though!

yep, this is what I do,saves a lot of hassle and trouble, I know exactly what I need to pay per year,and set aside my own money for taxes separate from the mortgage payment. much simpler we used to include it in mtg,but it constantly needed changing based on their mistakes,so I switched it when we did a refi,no issues since.(had to have a certain equity level etc to qualify for this option)

 

[hsmamato2]

hahahaha so funny (not,it's actually shocking) the difference in taxes on real estate...we now pay approx. 5600 per year for a 1300 sf home.....

 

[Arielle22]

We pay around $1200 for insurance and 6k for taxes. I am one who expects taxes to go up each year. Only once in the 20 years we have owned this home have we ever gotten a check when the yearly computation is done.

 

[gracie1]

yep, this is what I do,saves a lot of hassle and trouble, I know exactly what I need to pay per year,and set aside my own money for taxes separate from the mortgage payment. much simpler we used to include it in mtg,but it constantly needed changing based on their mistakes,so I switched it when we did a refi,no issues since.(had to have a certain equity level etc to qualify for this option)

This is what I do. I would rather put the money away and pay the bills myself.

 

[Ginny Favers]

Our mortgage bill keeps going up each year, usually by $50 or so, to accommodate escrow shortages. This year, though, we'll be getting a check back, because I reassessed our property and we have about $1000 in escrow more than is needed. I'll be throwing it right into the mortgage.