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So I'm closing tomorrow at 5pm, and just received my HUD statement. It lines up with the GFE I received, with a (large) difference on the number of months of property taxes due at closing. The GFE estimate had 3 months of property taxes (about $1500), whereas the HUD statement has 13 months (about $6500). We can afford the difference, but that seems like a ridiculously large amount to be escrow (besides, can they even have more than one year in escrow at a time?). Is this a normal amount to be escrowed? And if not, is there anything I can/should do to bring the escrow amount down to a reasonable amount? Located in Wisconsin FWIW.
Sound like local customs may be a bit out of whack -- on the IL side of the "great cheese curtain" property taxes are due right now, but that would be seller's responsibility to pay NOW as these are the 2008 taxes...
The taxes for the period of Oct-December would be your responsibility and the seller would be responsible to escrow the prior 9 months of the 2009 taxes that will be due in 2010...
By any chance is this a short sale or other distressed property that the seller has gotten behind on everything?
Nope - not a distressed property. It looks like (assuming I'm reading the HUD correctly) the sellers are crediting us (instead of our escrow account) with the taxes from Jan 1st to the closing date. If I take the dollar amount they want us to escrow, subtract the amount the sellers are giving us, and divide that by the monthly property tax escrow fee - it's about 3.5 months of escrow. Does that sound correct?
Lenders pad your escrow account with 2 additional months of taxes and insurance. They do this for when the state raises your taxes they will have additional funds in escrow to cover, but they will increase your payment when that happens to make sure they are collecting the correct amount to cover your tax bill.
by the way, congrats on your new home.
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