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Unread 10-04-2009, 09:59 AM
 
98 posts, read 149,693 times
Reputation: 43
Default Escrow goes up every year

Hello, I need help my escrow just went up this year 200.00 now Iím up to 1390.00. Iím from Rogers AR my mortgage holder is CITI MORTGAGE my husband lost his job in may 09 we canít afford this amount. What are my options? Will the bank work with me instead of foreclosure. What can I do?
P.S MY TAXES OR HOMEOWNERS DIDNT GO UP I THINK IT HAS TO DO WITH
P.M.I (PERSONAL MORTGAGE INSURANCE) BECAUSE ONLY BUT 10% DOWN
NEVER BEEN LATE! We got mortgage 1 1/2 years ago at 950.00 month
30 year regular at 5.5%

Thank you

MRS AR
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Unread 10-05-2009, 01:44 PM
 
Location: Plano, Texas
1,667 posts, read 3,879,034 times
Reputation: 629
PMI is set at the beginning of the loan and cannot change so the increase has to do with either your property taxes going up or your homeowners insurance going up. Not much your bank can do to help since they do not set the tax rate in your state.

You could contact your state and dispute the property value which might lower your taxes. Also, shop your home owners insurance, you might be able to find a new insurance company offering better rates which could help to reduce your payment.
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Unread 10-05-2009, 02:15 PM
 
23 posts, read 105,545 times
Reputation: 19
When you take out a mortgage, I believe that lenders require you to pay up to a year's worth of stuff in advance that goes in to escrow (i.e. hazard insurance, taxes). So you will see it as a "closing cost" instead of building it up over the year based on the escrow low-water mark which is what happens on subsequent years. This will make your monthly mortgage payment higher after that first year. At least this is how my mortgage was done.
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Unread 10-06-2009, 06:17 AM
 
Location: Virginia
6,525 posts, read 8,362,698 times
Reputation: 3033
Sorry to hear your predicament. Same thing happened to us, and it stings, but we're getting by...

Seems like a bait and switch thing almost that they give you a lower payment initially to get you in the house knowing that the escrow is most likely going to be short and your payments will increase in subsequent years. I can certainly see where they have incentive to lowball property tax "estimates" and figure it'll all get worked out later once you're in the loan..... Quite clever really, but it sucks.
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Unread 10-06-2009, 07:34 AM
 
Location: DFW - Coppell / Las Colinas
16,926 posts, read 14,078,349 times
Reputation: 15154
It can hit you double hard if you buy new construction. The home value may be based on "Raw Land" and can take several years of increases to get the escrow amount where it should have been in the beginning.

It's a common mistake many 1st time buyers make.
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Unread 10-06-2009, 08:08 AM
 
Location: Stuck on the East Coast, hoping to head West
1,791 posts, read 3,713,856 times
Reputation: 2136
You might want to check how much the lender is keeping in escrow. There is a limit to how much they keep as a "cushion". In some situations, you don't have to have an escrow account--I don't use escrow anymore. I started paying my own taxes and insurance after realizing my lender was keeping over $500 floating in my account. Money that they weren't required to pay me any interest on. And that cushion kept going up every year.

Anyway, from HUD page HUD RESPA FAQs by Consumers about Escrow Accounts

The RESPA statute and regulations do not require the lender to maintain a cushion. However, since 1976 the RESPA statute has allowed lenders to maintain a cushion equal to one-sixth of the total amount of items paid out of the account, or approximately two months of escrow payments. If state law or mortgage documents allow for a lesser amount, the lesser amount prevails.

There is a lot more information here. Check it out.
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Unread 10-09-2009, 06:56 PM
 
4,087 posts, read 4,787,762 times
Reputation: 2797
^^But they only put 10% down so they must have an Escrow account. Did you do Homestead?
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Unread 10-09-2009, 08:57 PM
 
Location: I think my user name clarifies that.
8,294 posts, read 12,583,093 times
Reputation: 3618
Quote:
Originally Posted by JMANN989 View Post
Hello, I need help my escrow just went up this year 200.00 now I’m up to 1390.00. I’m from Rogers AR my mortgage holder is CITI MORTGAGE my husband lost his job in may 09 we can’t afford this amount. What are my options? Will the bank work with me instead of foreclosure. What can I do?
P.S MY TAXES OR HOMEOWNERS DIDNT GO UP I THINK IT HAS TO DO WITH
P.M.I (PERSONAL MORTGAGE INSURANCE) BECAUSE ONLY BUT 10% DOWN
NEVER BEEN LATE! We got mortgage 1 1/2 years ago at 950.00 month
30 year regular at 5.5%

Thank you

MRS AR
You need to call your lender and demand answers - which they're not going to willingly give you. Actually, your monthly mortgage statement should have all that information spelled out clearly.

All we can do here is make educated guesses.
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