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I just heard from my Step-Daughter. She just got notification that the finance company "misjudged" their taxes and they will be raising their house payment by $450 a month!!! Man, do I smell a rat! I bet this has happened to thousands of people. No wonder the housing industry is at rock bottom. The sales people don't care! They throw an attractive monthly payment out there, get you to sign on the dotted line, and forget you. A year later, you get a letter that says there was a "mistake" made. THE HOUSE PAYMENT YOU HAVE BUDGETED FOR IS WRONG. They have their sale and their commission. You're just another sucker that fell for one of the biggest scams around.

THIS OUGHT TO BE AGAINST THE LAW!
 

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I just heard from my Step-Daughter. She just got notification that the finance company "misjudged" their taxes and they will be raising their house payment by $450 a month!!! Man, do I smell a rat! I bet this has happened to thousands of people. No wonder the housing industry is at rock bottom. The sales people don't care! They throw an attractive monthly payment out there, get you to sign on the dotted line, and forget you. A year later, you get a letter that says there was a "mistake" made. THE HOUSE PAYMENT YOU HAVE BUDGETED FOR IS WRONG. They have their sale and their commission. You're just another sucker that fell for one of the biggest scams around.

THIS OUGHT TO BE AGAINST THE LAW!
Same thing happened to the wife and I. Apparently, the escrow was incorrect a year, so we wind up having to pay a year of 2k monthly payment instead of the 1200. In the end, we saved some money, and refinanced without having to pay the BS pmi.
 

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Got Wasabi?
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Go over your Step-Daughter's loan contract with an Lawyer, preferably one experienced in Real Estate.

The slightest little bit of "funnyness" should be immediately reported to the Texas Attorney Generals Office. Don't believe any lines like "it was silly mistake", "our computer screwed up", etc. If they haven't done or tried anything wrong, they have nothing to fear.

Also call a local TV station's consumer affairs reporter.
 

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Brand new home?
Happens a lot with new homes as the tax value when it is sold is that of the empty lot. A year later when the value is adjusted the escrow payment goes way up. Make sure they have a homestead exemption as well as it will save some.
 

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Thats a shame. History shows that many lenders used unimproved taxes to qualify borrowers for more home than they could afford (debt to income ratio). Collectively between the sales person, realtor and lender, unimproved taxes should have been explained. Your are correct though. No telling how many thousands of buyers have lost their home due to unpaid taxes, rather than missed mortgage payments.
 

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Reel Easy
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Same thing happened to me the first year after I bought my house so I know the pain...then the next year I got almost $1,300 back b/c of an overage in my escrow.

Hope it works out
 

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Why do escrow at all? Keep the money in your own account & you collect the interest until the payments are due. Don't give the loan holder a free ride with your money.
 

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Why do escrow at all? Keep the money in your own account & you collect the interest until the payments are due. Don't give the loan holder a free ride with your money.
Most companies will require at least 20% down or 20% equity in the house before the escrow can be dropped and paid by the home owner directly.

I am always amazed when people buy things and don't know what the costs are. In my county a tax bill equaling $450/month is a $350-400k house, how do you buy that much house and not know what the taxes are. Two things can happen when purchasing a house. the first is the new house deal already discussed and the other is someone buying a house for much more the the current tax value. When the new sale/lien, with little down, the purchase price or loan amount is recorded as the new value. Guess what the taxes are not the same as with the old value.

Take some responsibility and research your costs before you buy, not a year later. The Title Company is working with "current" tax rates not what they will be after your purchase.
 

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Every heard about waiving escrows?? That means paying your own taxes and insurance when due....
Amen to that. I did that with our second (now) home. Too many times there would be a shortage. You need to be discipline though. I have a ball park figure of the years taxes, divide by 12 and each month move that amount into a money market. I get April's tax estimate and adjust accordingly and at the end of the year pay the taxes out of the money market while making a few bucks in interest.
 

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Same thing happened to us.

FYI - some loans you are forced to carry escrow.

I know on our FHA loan we had no choice, had to have escrow
 

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Same happen to the wife and I the first year in a brand new home in a brand new subdivision. Luckly it happen to her friend and she was expecting it. Had saved the money to pay the difference.
 

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if you escrow you best do your own accounting. remember how much you paid in and how much were taxes and insurance. 450 a month more sounds excessive.
 

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Hey is could be worse, our Galveston canal house was destroyed by Ike to the point where Galveston County lowered my improvement value to $500 (my boat dock was undamaged). Even though I have repeatedly called Chase Home Finance and explained that they are collecting property tax escrow on a house that was no longer there they tell me that is their policy! Over the 5 years that we have owned that house the escrow has had varied by as much as $700 up or down. Now that they have WAY overcollected on the escrow I should have a significantly lower mortgage payment on the new home come next year.

And I agree with a previous poster regarding new homes. It should almost be criminal for a mortgage company to prepare a good faith and lending statement utilizing the assessed taxes on the improvements that have yet to be completed. As a residential real estate appraiser I always have taken my market value opinion and multiplied by the appropriate tax percentage figure and used that number as my tax estimate. That has made more than one mortgage company mad as hell at me because that increases the PITI and kept some potential buyers from be able to qualify for the loan. Too bad I have always said, I think most buyers would rather know now than find out the bad news a year later.
 

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x2 or 3 or 4 on waiving the escrow. No sense in letting the bank make money off of your escrow money when you can be doing it yourself.

Not to mention you save thousands of dollars at closing (typically 1 or 2% of the sales price) because you don't have to put that money into a reserve account.
 

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That happened to me... but then again we expected it to as well.. I don't care who you are if you get a 30 year note, you can base your payment on 1/100 of the property loan value monthly. For instance, My house cost $80,000 with all the fees, etc. My payment is $780 a month, wich includes my escrow that has not changed much in the last 5 years. But.... the first year my payment weren't but $530.....

She must have a really expensive house!
 

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Same thing happened to me this year. This is my 3rd yr in the house and they messed up on the first TWO years and raised me by about 550 a month. Was going to sell but decided to tough it out. This happened to most of the houses in my neighborhood (new subdivision) and i'd say about 50% of them bailed out and the houses were foreclosed on. Now im stuck in a house with very little equity in a neighborhood where the houses are selling for around 30K less than what was paid for them less than 2 years ago in some cases.
 

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This will happen to everyone that has an escrow acct. Hopefully the value of your home is increasing, which in turn will increase your taxes! No way around it unless you write a check for the difference at the end of the year or don't escrow. But like mentioned earlier, you have to put 20% down in order to waive escrow. If hers went up that much I would guess it was a new house and they based the taxes on lot value only.
 

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Same thing happened to me because the geniuses at the mortgage company took out enough the first year to cover the $900 taxes on the lot instead of the $3600 on the lot and house. Mine went up $350 a month for a year and then I get a $700 check in the mail for overages. The first thing I would do is fight the appraisal value. My house's initial appraisal was lowered the first time because I fought it and it hasn't changed for 6 years.
 
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