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Old 06-13-2010, 07:28 AM
 
Location: Friendswood, TX
18 posts, read 24,064 times
Reputation: 31
Default Buying a Home: Prepaid Property Tax Question

We're set to close on our new home tomorrow (or possibly Tuesday-- the lender has been behind). After business hours on Friday, the lender (USAA) sent me an email of estimated closing costs. The closing costs on the new estimate are about $4500 MORE than what was listed on the "good" (and I use that tern loosely) faith estimate. It seems that the difference is in the amount they are escrowing for property taxes. On the new estimate, they want 11 months of county taxes (but only 3 months of city taxes and only 3 months of hazard insurance???). We have the cash to cover it, but it will wipe out our savings . I am NOT a happy camper. I can't talk to them b/c it's the weekend (I did, however, leave the loan officer a message this weekend). I was wondering if this has happened to anyone else. I am really upset that I was basically lied to on our GFE. Do I have any recourse?? The home is in Friendswood (inside city limits, FISD, galveston county), and it is a completely "normal" sale-- not a foreclosure or short sale, if that info matters at all.--Katie
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Old 06-13-2010, 08:14 AM
 
Location: Houston, TX (Oak Forest)
3,502 posts, read 6,839,959 times
Reputation: 2292
That seems excessive, especially since it is June so seller Should be paying for 6 months so 11 months would pay all of this years taxes and half of next year. I think the typical escrow is 3 months. Plus they have to refund you back any excess the next year so frankly it makes no sense to ask for 11 months escrow in June.
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Old 06-13-2010, 09:10 AM
Status: "Character is what you do when no one is looking..." (set 23 days ago)
 
Location: San Antonio/Houston
20,116 posts, read 19,843,115 times
Reputation: 45388
Federal law requires that a prospective lender provide a Good Faith Estimate to you within three days of applying for a mortgage. Unfortunately, there's often a large discrepancy between the estimate and what you actually end up paying.

Some unscrupulous lenders intentionally low-ball the estimate in order to get your loan, knowing that by the time you see the actual amounts (the day before settlement), you'll be so deeply into the process that you won't pull out and look for another lender. The US government is working on making changes to the law to force lenders to be more accurate on the good faith estimates.

Typically, closing costs run between 3% and 5% of your loan amount, so if you're borrowing $100,000 you can expect closing costs of $3,000 to $5,000. If you're borrowing $200,000 you can expect closing costs of $6,000 to $10,000.

The smart thing to do is to obtain good faith estimates from two or three lenders and compare the costs. Then be prepared to ask the lender you choose to meet the best offer. Here are some of the items you can expect to find on a Good Faith Estimate:

~ Loan origination fee (1% of the amount borrowed, or $100 for every $10,000 borrowed)
~ Loan discount fee
~ Loan application fee ($75 to $400)
~ Points (to "buy down" the interest rate: between $100 and $300 for every $10,000 borrowed)
~ Lender's attorney fees
~ Buyer's attorney fees
~ Appraisal fee
~ Credit Report
~ Lender's inspection fee
~ Mortgage broker commission or fee
~ Tax service fee
~ Processing fee
~ Underwriting fee
~ Wire Transfer fee
~ Interest from the day of settlement to the date of the first mortgage payment
~ Private mortgage insurance premiums to protect your lender ($750 to $1750)
~ Hazard insurance premiums
~ Property taxes from the day of settlement to the end of the tax year
~ Settlement or closing/escrow fee
~ Document preparation fee
~ Notary fee
~ Title search and title insurance to protect your lender ($400 to $600)
~ Title insurance to protect you
~ Recording fees
~ Tax stamps
~ Pest inspection

Property taxes placed in an escrow account are one of the largest expenses at closing. The amount depends on the value of the house you buy and the tax rate in the town or county where the house is located. Many lenders require you to include a monthly estimate with your mortgage payments equal to 1/12th of your annual property taxes and homeowners insurance. For most people, this is easier than coming up with a large lump sum each year when taxes are due.

Don't be taken advantage of at closing, and don't go to closing unprepared. Educate yourself about the ins and outs of home buying before you start looking for your first home.
Be Prepared for Closing Costs When You Buy a Home
other useful info:
http://ts.realestate.com/blogs/tipsa...checklist.aspx
Closing the Deal
Closing Costs Average Charge Description
Points 1 point equals 1% of the total loan amount. These are fees lenders demand upfront in exchange for a lower rate, with each point equaling 1% of the mortgage value. As a general rule, the more points a buyer pays up front, the lower the interest rate on the mortgage.

Application fee $295 Nearly half of lenders will charge an application fee.
Credit check $24 Only in rare circumstances will a lender waive the fee for a credit check.
Attorney's fee $350-$1,200 Fees could be even higher in urban areas. In some regions of the country, it's more common to hire a title agent.
Lender's attorney fee $441 If you make some noise, the lending officer may drop this fee.
Title search $212 A title search is done to make sure there aren't any unpaid mortgages or tax liens on the property.
Title insurance $391 Even if the title search comes up clean, a lender will often require insurance to guarantee that the title is clean.
Appraisal fee $350 Your lender will want a statement of your property's value from an independent appraiser.
Inspections $85 Some lenders may require that your property is also surveyed, which could cost another $200.
Local fees (recording fees) $107 This fee will vary greatly by region.
Documentation preparation $214 Technically, this covers the preparation of the final legal papers. It's a junk fee if other paperwork fees exist also.
Source: HSH Associates

http://www.goodadvicepress.com/close.htm

Last edited by elnina; 06-13-2010 at 09:29 AM.. Reason: added
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Old 06-13-2010, 10:30 AM
Status: "Character is what you do when no one is looking..." (set 23 days ago)
 
Location: San Antonio/Houston
20,116 posts, read 19,843,115 times
Reputation: 45388
There is this you should know too: ( #3!!)
A Layman's Guide to Mortgage Application Junk Fees
*other topics are interesting also
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Old 06-13-2010, 11:33 AM
 
1,170 posts, read 1,334,366 times
Reputation: 1202
I just closed last week and also had to put quite a bit into our property tax escrow. One silver lining, however, is that it is and escrow, so you'll get the money back once you pay down enough on your mortgage to refinance.

Did they also set up your monthly payment to include your property tax payment? If so, 11 months pre-payment does seem excessive. Who is your lender?
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Old 06-13-2010, 11:50 AM
 
809 posts, read 2,076,138 times
Reputation: 539
If you put 20% down, you do not have to have an escrow account at all.

If you do use an escrow account, the seller will contribute the taxes for Jan - June 14 (or whenever you close). Are you sure they aren't crediting you that amount somewhere else on the GFE?

Talk to your realtor. He/she should be able to help since it's Sunday and you can't talk to the lender.
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Old 06-13-2010, 12:54 PM
 
Location: Friendswood, TX
18 posts, read 24,064 times
Reputation: 31
Quote:
Originally Posted by chris_ut View Post
That seems excessive, especially since it is June so seller Should be paying for 6 months so 11 months would pay all of this years taxes and half of next year. I think the typical escrow is 3 months. Plus they have to refund you back any excess the next year so frankly it makes no sense to ask for 11 months escrow in June.
This is my thought exactly. It also makes NO SENSE why they would only escrow 3 months of city taxes, yet they want 11 months of county taxes! I'm hoping that it's a typo. I WILL be speaking with someone ASAP on Monday morning.

Quote:
Originally Posted by AlexTx View Post
If you put 20% down, you do not have to have an escrow account at all.

If you do use an escrow account, the seller will contribute the taxes for Jan - June 14 (or whenever you close). Are you sure they aren't crediting you that amount somewhere else on the GFE?

Talk to your realtor. He/she should be able to help since it's Sunday and you can't talk to the lender.
We are getting a VA loan with 100% finanacing (we barely broke even selling our previous home, thanks to the cruddy housing market, so we pretty much had to start from scratch). Anyhow, we have to escrow . I will get to the bottom of this on Monday.

For those who asked: Our lender is USAA. We use them for all our banking, and LOVE their banking services, but we have thus far been thoroughly unimpressed with their mortgage services. --Katie
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