Holy crap! My mortgage is jacked! Advice needed

Request the mrotgage schedule and also the total values on each of these expenses (taxes, insurance, etc) seperately. Unless you have a really expensive home, those numbers sound over the top to me.

Be careful, and don't take anything for granted. My father demanded the mortgage schedules since his mortgage was resold several times and found substantial errors worth thousands, and they corrected the errors. Likely that no human has looked at this adjustment yet, and some simple requests for info on your part may resolve any errors.

 

Same thing happened to our house payment. The mortgage company was at fault since they fu-ed the escrow calculations. We called them on it, got real pissy, and they created a two year plan to get the escrow solvent again.

We have since refinanced and dropped the escrow completely

 

bobrek is right - mtg insurance is fixed at the onset of the loan agreement - it won't go up. And those other amounts can't be right unless you are living in $300k+ house and even then...? Only if they didn't set up an escrow account for you in the beginning (check your closing papers), would you see numbers like these.

 

Faos, a lot of things are screwey in your letter, make me question the ethics of the mortage company.

BTW what is you interest rate and how much did you originally put down on the loan?

Regardless of what you mortgage company says tomarrow I would explore refinancing. With a good 2 year record of payments unless other aspects of your credit are really bad you should be able to get a little under 6.00 with no points, you could also wrap up any legit underpayed escrow in the new loan so it is spread over 30 years. You may also have enough equity (if you house appreciated) to get ride of mortage insurance all together with a good appraisal with the refinance.

Just too fishy, I would really shop around with lenders recommended by friends on on this BBs if they still can (I am in AZ so can't help with the latter).

 

*head explodes*

 

Faos, what is your current interest rate and when was the last time you refinanced?

You might be able to lower your monthly rate to offset your higher taxes. You might be able to roll you current shortfall into a new loan so you don't have to come up with a big out-of pocket hit (you will still have to budget for the bigger monthly in the furture though)

Everyone out there should do whatever they have to do to avoid private mortgage insurance. You are paying for the banks insurance!

Renters, you are not avoiding real estate taxes; your just paying them for your landlord while he gets the tax deduction and the appreciation. If you know you are going to be in an area for at least 5 years and you can afford the down payment, it's probably a better idea to be a buyer.

 

If you bought anew house the property taxes they were withholding was prolly just ont eh land value (like $10,000) instead of the house value.

It's a typical stunt by home sellers who talk about the low monthly payments (you can own your own house for $900/month!!!!)

I had a similar thing happen my first year in my house (not to your degree tho). They said my escrow was short $2000 bucks or so.

 

My wife and I had a similar situation, although with an escrow shortage of only about 2k....

We live in Pittsburgh, PA. Over the last 2-3 years, all properties were re-appraised and our neighborhood was hit hard. When we purchased our house, it was assessed at only about 1/4 of its value, along with most other properties in the area. Over the last 3 years, our appraisal has almost quadroupled, and the tax millage has increased. The bad thing is, we can't really fight our assesment, since it is about market value. Right now, our mortgage has increased about 300 bucks/month between escrow shortage and adjusted escrow payment.

Not sure what kind of hazard insurance is needed in the Houston area, but the kind of increase they mention sounds absurd, however.

 

Hell if I know. Somewhere in the burbs. All the stuff that's centrally located either costs too much or is to congested and all the cheaper stuff is 30 miles away from civilization. I'm re-thinking this whole "apartments are bad" thing... lol.

Seriously, though, I just started looking today. I went up and around the McKinney, Allen, and Frisco areas. But didn't find much - it was a miserable day weatherwise to be looking for anything other than a bed to crawl into.

 

Act very quikly my next door nieghbor lost there house last year for the smae reason. There payment increased about 1000.00 more a month.

 

FAOS,

Check out this: http://www.hcad.org/Records/Real.asp

Type in your address and see what your house was appraised at the first year.

Alot of times, with new construction, your escrow is figured based on the HCAD value at the time of your closing. The problem is, with the house being new, the only appraisal on record is for the land because thats all that was there when it was appraised by the county. So say, if your house was $150K and the land part of it was $20K, then when they figured the escrow on your taxes, they projected your taxes based on $20K, instead of the $150.

This happened on my home also. However, I knew about it and had put money to the side to cover it.

Its also very possible that if your builder and mortage company were one and the same, that this was dont intentionally to make the numbers look more attractive to you so you woudl buy the house. Very sneaky, but it happens.

A good mortgage company will catch it though and verbally infrom you that your escrow will get bumped up once your new tax bill comes in based on the value of the land AND house.

 

Here are the two biggies for me:

1) Owning an appreciable assett: A good home will pay for your retirement years after you make your last payment.

Example: My parents are about to sell their home out here in Cypress. They just finished paying off their mortgage. They bought their house in 1974 for $66,000. Their house will now sell for around $190,000.

2) Tax breaks: I did my taxes yesterday. Between my property taxes and mortgage interest, I had a $20,000 deductions which turned a refund of a couple of hundred bucks, to a refund of almost $4,000K.

 

http://www.fbcad.org/

 

You need to be careful wrt refinancing. Our first lender had a penalty clause if we paid off the loan within five years. As far they were concerned refinancing with another company constituted paying off the loan. You might be able to pressure your mortgage company into a refinance before the five years by threatening to go with di-tech.

If refinancing is possible, you should be able to drop a full point off of your rate. You can also get a little extra cash from the refinance to pay for your escrow shortages.

You should also closely track your equity percentage. As soon as it reaches 80% you should be able to get it dropped from your monthly payment (after paying the mortgage company to have your house appraised ).

 

To add to what No Worries said. There is another way to get out of having to escrow every month.

You can do an 80/20 refinance. Basically, you would be taking out two mortgages. One for 20% of the value of the home, and the other for 80%. Banks have a requirement that if you borrow for more than 80% of the value of the home, then you have to escrow for your taxes, PMI, and HOI. By taking out a 2nd loan, to cover for anything over the 80%, then you get out of having to escrow. The 20% loan would be for a slightly higher rate, and a shorter term usually. In addition, doing an 80/20 loan will get rid of paying PMI, which is usually around $100 extra a month.

It will not, however, descrease what you have to pay in taxes and HOI at the end of the year. The good thing about it though, it allows you to keep all that escrow money in your own account, where you can earn interest on it until your taxes are due.

 

I bet you the home owners insurance went up because of the mold coverage. I just bought my house 4 months ago and the difference between coverage with and without mold was about 80%.