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Hi all, I am a first time home owner going through her first year. We are in the Herricks SD. We just received an annual escrow estimate for our house from our bank. The bank is raising our monthly payments by 300 a month. After some calculation, it appears the bank will take out about 17k for property tax. I went on mynassauproperty.com to check. Based on that, I saw that my tax did raise slightly into the 14k. We handle our insurance separately from the mortgage. We cannot figure why there is such a big gap. A 3k gap a year is significant for us and my husband is already talking about moving out of Long Island if our tax indeed goes up to 17k.
My questions are, how accurate is the escrow estimate? Is our tax really going up to 17k?
This is exactly why I would never let the bank handle my tax bill. They always estimate the amount high so that they have your free money to play with. I know they'll tell you that that is the amount the taxes will be but like all banks they lie. If you can, get that escrow account away from them and put that money into a savings acct. and pay your own taxes. They'll probably argue with you and say that you have to have an escrow acct. but you don't.
Not in my area, but why should it be ? The idea behind it is that the bank tells you that you only have to make 1 payment to cover everything, basically saying that otherwise, you'd have to put away the money to pay your taxes and a lot of people can't do that. If it's not in an escrow acct. you have to come up with the full amount all at once (in my case,I pay twice a year, 1/2 in April and 1/2 in Sept.) But if you budget for it, you'll have the $. I wouldn't let the bank have my money to use, not with the pitiful interest they're paying.
Not in my area, but why should it be ? The idea behind it is that the bank tells you that you only have to make 1 payment to cover everything, basically saying that otherwise, you'd have to put away the money to pay your taxes and a lot of people can't do that. If it's not in an escrow acct. you have to come up with the full amount all at once (in my case,I pay twice a year, 1/2 in April and 1/2 in Sept.) But if you budget for it, you'll have the $. I wouldn't let the bank have my money to use, not with the pitiful interest they're paying.
Also be aware that if you pay your property taxes on your own, you need to submit proof to the mortgage holder that they were paid timely. So you'll need to submit your bill and copy of paid check to the mortgage twice a year.
Hi all, I am a first time home owner going through her first year. We are in the Herricks SD. We just received an annual escrow estimate for our house from our bank. The bank is raising our monthly payments by 300 a month. After some calculation, it appears the bank will take out about 17k for property tax. I went on mynassauproperty.com to check. Based on that, I saw that my tax did raise slightly into the 14k. We handle our insurance separately from the mortgage. We cannot figure why there is such a big gap. A 3k gap a year is significant for us and my husband is already talking about moving out of Long Island if our tax indeed goes up to 17k.
My questions are, how accurate is the escrow estimate? Is our tax really going up to 17k?
Any help would be greatly appreciated!
On the plus side I think you get a fairly nice (by today's standards) state-imposed rate of return on your escrow account, until your lender kicks you back a check for your excess payments in a year or so.
What is an escrow cushion?
An escrow cushion is allowed by federal and most state laws and acts as an additional safeguard to cover unanticipated disbursements or disbursements made before all of your payment have been made into your escrow account. The maximum allowable cushion is equal to two monthly escrow deposits unless otherwise required by state law.
You should ask your bank what they did to arrive at the new number. I tried to make sense of it also and since mine didn't add up exactly either, it seems to come down to how much cushion they ask for. It looks like Wells Fargo asks us to maintain 1200 now (13k tax after exemptions), as opposed to 1000 when our taxes were lower.
Thank you all. I called the bank and asked how they did come up with the number especially when my tax only went up slightly and not 3k. The person on the phone was unable to tell me exactly how they came up with the number. The only thing he "blamed" was the fact that I did not submit my STAR exemption documents to them. Hmmm still doesn't explain the 3k gap.
I also looked into the escrow cushion that rh71 mentioned as well. I understand they need to maintain a certain balance in the account. I somehow still think their projection of the payments are a little high.
Now I am looking into managing my own property tax. I mean, if every year, I have to go through this and send them support, I might as well manage my payments myself. At least, I would be able to tell how much I am paying out. Perhaps I dont really trust the bank, but to have the extra money on their hand for months doesn't sound right to me.
My loan officer just called back. He explained this a little further. Looks like the bank and the town hall are not on the same page. I asked him if an escrow account is mandatory. He said if my ownership of the house is less than 30%, it is a requirement to have an escrow account. Looks like I will have to put up with it.
I now need to talk to the Loan Servicing people and see get them on the same page.
Don't they also pay the homeowners insurance out of escrow as well (at least when I lived on Long Island they did)?
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