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 Post subject: Escrow Shortages
PostPosted: Tue Dec 05, 2017 8:56 am 
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Got a nice surprise last week when paying my mortgage to find that it had increased a whopping $500 per month due to an escrow shortage. This is going to severely impact my ability to maintain my wine fridge and car leasing habits, but I digress.

Long story short: in 2016 we purchased our home from an elderly woman who was receiving tax breaks due to being incredibly old. We anticipated our taxes would increase, of course, but have since learned of the severe escrow shortage. Since the whole concept of escrowing is already a shady practice in the first place, I'm willing to accept that this is just how it is and we'll have to bite the bullet.

Question: is there any benefit to paying the shortage upfront or paying it monthly?


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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 9:13 am 
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Depends on how much cash you have and what you are doing with it I suppose. Big picture I think you could pay the new monthly payment but protest your taxes this year and hope it works out soon.

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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 9:16 am 
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No benefit other than peace of mind that it's prepaid.

I would have thought that someone would have given you a more accurate heads up on how much losing the senior exemptions on your home

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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 9:17 am 
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interesting. we recently had an escrow overage. our mortgage changed from Citi to Mr. Cooper and apparently Citi was holding too much escrow. anyway, we got a nice check and our monthly dropped $80 a month.

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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 9:20 am 
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pittmike wrote:
Depends on how much cash you have and what you are doing with it I suppose. Big picture I think you could pay the new monthly payment but protest your taxes this year and hope it works out soon.


Protesting your taxes now seems risky so soon after a recent purchase unless you got a great deal or it was a distressed sale. I'd check and see what it's assessed value now is first

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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 9:32 am 
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Regular Reader wrote:
pittmike wrote:
Depends on how much cash you have and what you are doing with it I suppose. Big picture I think you could pay the new monthly payment but protest your taxes this year and hope it works out soon.


Protesting your taxes now seems risky so soon after a recent purchase unless you got a great deal or it was a distressed sale. I'd check and see what it's assessed value now is first


This was another option we were considering. We're in the middle of remodeling most of the home, which we originally purchased at a great price for the area.

As far as appealing, we wouldn't be able to do so until August 2018 anyway. However, literally everyone I've spoken to in my town has appealed since it seems the area was grossly overestimated. I bet any town probably says that, though.


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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 9:37 am 
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Ugueth Will Shiv You wrote:
We're in the middle of remodeling most of the home


Keep in mind, that could also have an impact on your taxes (i.e., if you finish an unfinished basement or build any additions, you are technically supposed to report those to the assessor).

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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 9:38 am 
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Jaw Breaker wrote:
Ugueth Will Shiv You wrote:
We're in the middle of remodeling most of the home


Keep in mind, that could also have an impact on your taxes (i.e., if you finish an unfinished basement or build any additions, you are technically supposed to report those to the assessor).


True, although we haven't done anything that fancy. Refinish hardwood floors, knock down a couple walls, install three more wine fridges.


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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 10:36 am 
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Ugueth Will Shiv You wrote:
Got a nice surprise last week when paying my mortgage to find that it had increased a whopping $500 per month due to an escrow shortage. This is going to severely impact my ability to maintain my wine fridge and car leasing habits, but I digress.

Long story short: in 2016 we purchased our home from an elderly woman who was receiving tax breaks due to being incredibly old. We anticipated our taxes would increase, of course, but have since learned of the severe escrow shortage. Since the whole concept of escrowing is already a shady practice in the first place, I'm willing to accept that this is just how it is and we'll have to bite the bullet.

Question: is there any benefit to paying the shortage upfront or paying it monthly?


We just purchased a home under the same circumstances. One of two things should have happened,

They gave you the money upfront to pay the tax shortfall.

The money was deducted from your original down payment amount because the seller gave you the money at closing.

So...since they didn't give you a check, go back and look at your closing papers. If neither thing happened, then call your lawyer.

We had $8800.00 less to come up with at closing since they paid the shortfall upfront. I will be making our first mortgage payment today and will be sending a seperate payment strictly to cover most of the tax shortfall which we took at closing.

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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 11:12 am 
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Ugueth Will Shiv You wrote:
elderly woman who was receiving tax breaks due to being incredibly old

I seem to recognize...your house

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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 11:17 am 
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Curious Hair wrote:
Ugueth Will Shiv You wrote:
elderly woman who was receiving tax breaks due to being incredibly old

I seem to recognize...your house


i just want to scream...hello!


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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 12:51 pm 
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W_Z wrote:
Curious Hair wrote:
Ugueth Will Shiv You wrote:
elderly woman who was receiving tax breaks due to being incredibly old

I seem to recognize...your house


i just want to scream...hello!
Image

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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 3:24 pm 
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Seacrest wrote:
We just purchased a home under the same circumstances. One of two things should have happened,

They gave you the money upfront to pay the tax shortfall.

The money was deducted from your original down payment amount because the seller gave you the money at closing.

So...since they didn't give you a check, go back and look at your closing papers. If neither thing happened, then call your lawyer.

We had $8800.00 less to come up with at closing since they paid the shortfall upfront. I will be making our first mortgage payment today and will be sending a seperate payment strictly to cover most of the tax shortfall which we took at closing.


After further review everything seems to have been done correctly. The timing of when we moved in and the old lady moved out (within the tax year) caused things to get messy. Paying everything in arrears (hey-o) continues to confuse me when it comes to real estate taxes, and moving into a new place mid-year that had been receiving a tax credit previously caused the shortage.

Fuck.


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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 3:50 pm 
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Ugueth Will Shiv You wrote:
Seacrest wrote:
We just purchased a home under the same circumstances. One of two things should have happened,

They gave you the money upfront to pay the tax shortfall.

The money was deducted from your original down payment amount because the seller gave you the money at closing.

So...since they didn't give you a check, go back and look at your closing papers. If neither thing happened, then call your lawyer.

We had $8800.00 less to come up with at closing since they paid the shortfall upfront. I will be making our first mortgage payment today and will be sending a seperate payment strictly to cover most of the tax shortfall which we took at closing.


After further review everything seems to have been done correctly. The timing of when we moved in and the old lady moved out (within the tax year) caused things to get messy. Paying everything in arrears (hey-o) continues to confuse me when it comes to real estate taxes, and moving into a new place mid-year that had been receiving a tax credit previously caused the shortage.

Fuck.


Your lawyer should have explained this to you.

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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 7:10 pm 
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We got a sweetheart deal on our house and our lawyer managed to appeal our prop taxes down to meet our purchase price, rather than the assessed value. Flash forward a few years and a re-assessment has now taken place. Our taxes went up A LOT (almost doubled). It wasn't unexpected, but at least we got three sweet years of being under-taxed!

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 Post subject: Re: Escrow Shortages
PostPosted: Tue Dec 05, 2017 8:58 pm 
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I've always just paid my own property taxes. I set up a savings account as soon as my offer got accepted and I auto-transfer in a certain amount on the 17th of each month as I get paid 15th/31st. When I get my property tax bill at the end of April, I set up transfers out for 5/15 and 8/15 and pay the taxes a few days later at the county website. Then I adjust my monthly transfer so that I am transferring 1/10 of last year's tax each month instead of 1/12 so I have contingency for any increase and some money to pay the taxes the year I eventually move out.

The whole thing takes me about 45 minutes a year, and most of that is because you can't just leave your routing information on file with the Chase web site which does the payment processing for DuPage County.

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