Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Before our phone call with the bank, we tried to tie the difference back to the home owner's insurance too. Apparently, my husband told me that we always pay the insurance on our own. The bank did not handle that. So that did not justify the difference either.
When we first received the projection, my husband freaked out and thought our tax got so much higher, he said "we are moving out of long island!" hahahah
When my parents still had a mortgage, the bank actually paid the tax late a couple of times out of the escrow account. After that, my parents paid the tax themselves.
That depends entirely on the lender, not the Town/Hamlet/Village.
Good to know. With so many rules in the town of Hempstead, I thought it was some rule.
With my condo in Brooklyn the bank made no rules regarding property taxes and I just pay the city when I get a bill.
I don't think you understand what they are saying....I will make it easy to comprehend.
Your RE taxes are $10,000 which =$833/month. The bank wants to take $12,000/ yr for any "increase" in taxes. Which we all know it wont go up $2,000. They use the extra $ to invest to make a profit. Get it?
The OP clarified banks expectation but my point still stands...so who cares if the bank asks to hold an extra 2k?? It's still the borrowers money. It's just being held by the mortgagor.
There could also have been an underlying reason. I'm not saying the OP is a high risk borrower but maybe if they were, the bank would want more of a "security deposit" in case of default. And for the record, I would not be surprised if my taxes went up substantially each year so to say "which we all know won't go up 2,000" is foolish in Long Island real estate. Maybe they had an addition put on the house and they were accounting for the increase in assessment? Or maybe they miscalculated as ending up the reason.
These days especially after Mortgage Reform laws a few years back and the amount of defaults the lenders saw, most lenders will require escrow to be held for taxes and insurance at least for an initial period of time. It completely depends on the lender. I have seen lenders make escrow completely optional, some optional based on credit score or amount of DTI, and others make it non-optional completely required. Think of it as an installment plan but where they take extra money upfront and at other intervals to ensure if/when the taxes or insurance go up, they will always have enough and not experience a shortfall. The amount of actual upfront escrow taken at closing will also depend on many factors, including when you close, when the next taxes are due, etc. The lender is only allowed by law to take a maximum of three months cushion and most take two to the max. No one knows or can explain precisely how their escrows and cushions are calculated but you can estimate quite closely by looking at when your first payment is due (that would include the escrow portion of the monthly payment), when the next taxes are due and adding a couple months cushion on top of that. Hazard insurance escrow the lender takes 1/12 beginning your first monthly payment so they can pay the total yearly premium upfront when due the FOLLOWING year.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
