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Bought a house in January. Purchase price was 300K. At time assessed value was 389K and taxes were $6000. Currently I am being charged $503 per month into escrow.
Received notice yesterday that the assessed value for 2012 is being lowered to 257K. So my taxes should drop to only about $4000. If I continue to pay $503 that is obviously much more than necessary. Any way to get that lowered?
Bought a house in January. Purchase price was 300K. At time assessed value was 389K and taxes were $6000. Currently I am being charged $503 per month into escrow.
Received notice yesterday that the assessed value for 2012 is being lowered to 257K. So my taxes should drop to only about $4000. If I continue to pay $503 that is obviously much more than necessary. Any way to get that lowered?
You may be able to get it lowered now, but the problem I expect you'll run into is that you received the notice of assessed value, you did NOT yet receive the actual amount you will be billed.
Who services your mortgage? What state is the property in?
Also, what schedule does your county bill taxes on?
Here is why I ask:
In my county, I get my assessment notice for 2012 taxes in early 2012. However, our taxes are due, 6 months in arrears, in June and December. So the taxes I paid in June, 2012 were for the 2nd half of 2011, and based on 2011's value. So for several months after I got my assessment notice, the higher amount would still need to be collected, in order to have sufficient for June's payment.
Also, be aware that just because your assessed value dropped by 1/3 doesn't mean your taxes drop by 1/3. Usually that is not the case, they just raise the tax rate to make up some or all of the difference and keep the taxes close to the same. My value is down about 30% from peak values, but my taxes are actually UP 7% from where they were in 2006. Actually, over the last 9 years, my taxes were lowest during the years that my value was the highest. I thought that was odd, so I pulled my mother's house, and it wasn't true for hers. However, her value dropped from 2010-2011 about 4%, while her taxes went up about 4%. There isn't a direct correlation. (re-reading Debsi's post, I'm sure this is what she was getting at as well)
Edit* I actually just looked, and the budgets for 2012 aren't even set yet for the year. Most departments have their hearings in July or August, so my county doesn't even know yet what my 2012 taxes will be at this time. That being the case, I don't think there would be any chance to get my escrow payment reduced.
Sorry for the second post, but after editing my above post, it occurred to me that you may not know how the escrow process works, to know that you won't have to pay this amount forever.
Here is what they do:
Once a year (mine is in December), the bank is required to review the escrow account and meet certain guidelines. They look at what the current taxes and insurance bills are, and what you are paying in and extrapolate what the balance will be every month. They have a guideline that they can't keep more than 1/6th of the annual expenses as a minimum balance. So once a year, I get a notice that my escrow payment is changing slightly, and they either issue me a check for overage, or have my next payment be short, or I have to write a check, or have my next 12 payments be higher to make up the shortage, depending.
So even if there is an overage, they don't keep the huge overage in their account, and you won't keep paying the wrong amount forever. It adjusts every single year to keep it at a certain level.
Sorry for the second post, but after editing my above post, it occurred to me that you may not know how the escrow process works, to know that you won't have to pay this amount forever.
Here is what they do:
Once a year (mine is in December), the bank is required to review the escrow account and meet certain guidelines. They look at what the current taxes and insurance bills are, and what you are paying in and extrapolate what the balance will be every month. They have a guideline that they can't keep more than 1/6th of the annual expenses as a minimum balance. So once a year, I get a notice that my escrow payment is changing slightly, and they either issue me a check for overage, or have my next payment be short, or I have to write a check, or have my next 12 payments be higher to make up the shortage, depending.
So even if there is an overage, they don't keep the huge overage in their account, and you won't keep paying the wrong amount forever. It adjusts every single year to keep it at a certain level.
Yeah. I googled and pretty much found the same thing. They will issue a refund check when the taxes are paid and there is a big surplus. My 2012 taxes won't be paid until the end of 2013 though so I am probably not likely to see any refund for another 18 months. That's fine though.
I realize taxes rise but the key here is that my house has gone down in comparison to all my neighbors. When I bought it my assessed value was 50K more than houses which were selling for 50K more than my house. This house was being severely overtaxed. Now my house will have an assessed value 80K lower than those houses which were selling for 50K more.
I think the recent sale has caused them to reevaluate and realize that the house was assessed way too high to begin with. This is not just a matter of all house prices dropping. This is my house in particular dropping more than 100K compared to all my neighbors. So if my taxes were to go up, my neighbors taxes would practically double.
Ah, yes, if yours has dropped substantially in comparison to the others in your area, then you should expect your taxes to go down. From your first post, it just appeared that you were expecting a direct correlation (ie "If my house value cuts in half, my taxes should too") to be true all the time, and I wanted to make clear that that isn't usually the case. Most people do assume that to be true until they buy their first home and find out otherwise.
My current mortgage company (BB&T) told us we could request an escrow analysis at any time and if warranted, they would adjust our escrow. We had our yearly readjustment in October, but then in December our taxes were paid at a considerably lower amount than the previous year, so I called them in January and our payment was lowered about $75/month.
This was a first for us because all my previous mortgage co's did yearly analysis in February or March, soon after property taxes were paid, but BB&T does the yearly analysis on the month-anniversary of your mortgage origination, which doesn't make much sense to me.
Call them and see, but they probably won't do anything until the actual taxes are paid.
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