Another Mortgage Question

[iamwiz82]

Can someone please explain to me why part of my closing cost is for future property taxes, plus I have to pay monthly for it as well? Is that initial amount just to secure that I can pay it in the future? When does that initial deposit come out of escrow?

 

[KK]

The amount you are paying isn't the full amount of taxes, right?

KK

 

[iamwiz82]

Originally posted by: KK
The amount you are paying isn't the full amount of taxes, right?

KK

6 months in advance.

 

[MustISO]

AFAIK you pay ahead so that the mortgage company can pay it for you out of escrow. You have to pay some upfront. Then it's split up into your mortgage and that amount goes into escrow as well and is paid out in taxes by the mortgage co. This is how I understand it.

 

[spidey07]

Your escrow account is an "approximation" of charges.

From this account taxes and insurance will be withdrawn and paid. Here in KY, property taxes are paid annually.

 

[KK]

Well, they got to have some money in the escrow account to pay taxes and the insurance. So I guess they prorate the amount so that with the amount monthly you are putting in and the amount that was initially put in will cover taxes/insurance once they are due. Yearly they will adjust the amount so that you aren't putting in too much or too less. It'll even out.

 

[iamwiz82]

It doesn't seem like that is what is happening, however.

Taxes are approximately $800 per 6 months. $800 needs to go in escrow plus they want $133.33 a month on top of that.

 

[NL5]

Originally posted by: iamwiz82
It doesn't seem like that is what is happening, however.

Taxes are approximately $800 per 6 months. $800 needs to go in escrow plus they want $133.33 a month on top of that.

That's standard.

They want to have MORE than enough money in the escrow account to pay the taxes However, there is a law that they can have too much in there either. I have gotten checks from the mortgage company due to this.

 

[Lola]

plus, we are having to pay insurance in full for the year as well as we are paying monthly for insurance as well, thats what we dont understand

 

[GasX]

$800 every 6 months? I am so jealous. I am buying a house that is much more than that amount PER MONTH! :Q

 

[spidey07]

Originally posted by: iamwiz82
It doesn't seem like that is what is happening, however.

Taxes are approximately $800 per 6 months. $800 needs to go in escrow plus they want $133.33 a month on top of that.

so taxes are 1600 a year or 16/12 = 133 a month. sounds right to me.

 

[rahvin]

Originally posted by: iamwiz82
It doesn't seem like that is what is happening, however.

Taxes are approximately $800 per 6 months. $800 needs to go in escrow plus they want $133.33 a month on top of that.

Take your yearly tax bill, add in your homeowners insurance and divide by 12, that is your monthly escrow. When you buy your house you are buying x months into the tax year, at close you need to escrow (taxbill/12)*X.

Do you understand now?

 

[iamwiz82]

Originally posted by: NL5

Originally posted by: iamwiz82
It doesn't seem like that is what is happening, however.

Taxes are approximately $800 per 6 months. $800 needs to go in escrow plus they want $133.33 a month on top of that.

That's standard.

They want to have MORE than enough money in the escrow account to pay the taxes However, there is a law that they can have too much in there either. I have gotten checks from the mortgage company due to this.

When can I get that back? If I re-fi and get out of escrow? I can take care of my own bills, but they want that escrow there since I am a first time buyer.

 

[spidey07]

Originally posted by: Mwilding
$800 every 6 months? I am so jealous. I am buying a house that is much more than that amount PER MONTH! :Q

in taxes!!!!!!!!

you pay over 9600/month in taxes!!!!!!

you live in russia?

 

[spidey07]

Originally posted by: iamwiz82

Originally posted by: NL5

Originally posted by: iamwiz82
It doesn't seem like that is what is happening, however.

Taxes are approximately $800 per 6 months. $800 needs to go in escrow plus they want $133.33 a month on top of that.

That's standard.

They want to have MORE than enough money in the escrow account to pay the taxes However, there is a law that they can have too much in there either. I have gotten checks from the mortgage company due to this.

When can I get that back? If I re-fi and get out of escrow? I can take care of my own bills, but they want that escrow there since I am a first time buyer.

you can request your escrow account to be reviewed. But honestly everything looks good.

 

[CPA]

Originally posted by: iamwiz82

Originally posted by: KK
The amount you are paying isn't the full amount of taxes, right?

KK

6 months in advance.

That's strange, but it may be a requirement of the lender to insure that you have enough escrow on hand. Where's Vic when you need him?

 

[rahvin]

Originally posted by: Lola
plus, we are having to pay insurance in full for the year as well as we are paying monthly for insurance as well, thats what we dont understand

You are escrowing next years insurance payment as part of the monthly payment. It's simple your mortgage company insists that you pay taxes and insurance, they escrow the amount to make sure it's paid, the escrow has to have the required money in it at payment time so if you go into the mortgage 6 months into the tax year you need 6 months of taxes put into the escrow, in addition insurance companies require payment in advance of coverage so you are paying the full years coverage at closing. Your escrow amount is the remaining taxes and next years insurance.

At closing the seller is going to end up paying you the property taxes for the months he owned the house.

 

[CPA]

Originally posted by: Lola
plus, we are having to pay insurance in full for the year as well as we are paying monthly for insurance as well, thats what we dont understand

The monthly insurance that you are paying now is to build up for the payment the lender will make on your behalf at the end of the year. If you would have waived escrow then you would not have needed to do that, and most likely your insurance company would allow you to make monthly payments starting next year.

 

[NL5]

Originally posted by: iamwiz82

Originally posted by: NL5

Originally posted by: iamwiz82
It doesn't seem like that is what is happening, however.

Taxes are approximately $800 per 6 months. $800 needs to go in escrow plus they want $133.33 a month on top of that.

That's standard.

They want to have MORE than enough money in the escrow account to pay the taxes However, there is a law that they can have too much in there either. I have gotten checks from the mortgage company due to this.

When can I get that back? If I re-fi and get out of escrow? I can take care of my own bills, but they want that escrow there since I am a first time buyer.

I believe that it will be required until you have an 80% LTV ratio.

 

[iamwiz82]

Originally posted by: NL5

Originally posted by: iamwiz82

Originally posted by: NL5

Originally posted by: iamwiz82
It doesn't seem like that is what is happening, however.

Taxes are approximately $800 per 6 months. $800 needs to go in escrow plus they want $133.33 a month on top of that.

That's standard.

They want to have MORE than enough money in the escrow account to pay the taxes However, there is a law that they can have too much in there either. I have gotten checks from the mortgage company due to this.

When can I get that back? If I re-fi and get out of escrow? I can take care of my own bills, but they want that escrow there since I am a first time buyer.

I believe that it will be required until you have an 80% LTV ratio.

If they accept our offer, we will be at apporximately 70% LTV.

 

[CPA]

Originally posted by: NL5

Originally posted by: iamwiz82

Originally posted by: NL5

Originally posted by: iamwiz82
It doesn't seem like that is what is happening, however.

Taxes are approximately $800 per 6 months. $800 needs to go in escrow plus they want $133.33 a month on top of that.

That's standard.

They want to have MORE than enough money in the escrow account to pay the taxes However, there is a law that they can have too much in there either. I have gotten checks from the mortgage company due to this.

When can I get that back? If I re-fi and get out of escrow? I can take care of my own bills, but they want that escrow there since I am a first time buyer.

I believe that it will be required until you have an 80% LTV ratio.

not true, you can waive escrow, which usually costs .25% at closing.

 

This is standard procedure, who is your lender?

 

[NL5]

Originally posted by: CPA

Originally posted by: NL5

Originally posted by: iamwiz82

Originally posted by: NL5

Originally posted by: iamwiz82
It doesn't seem like that is what is happening, however.

Taxes are approximately $800 per 6 months. $800 needs to go in escrow plus they want $133.33 a month on top of that.

That's standard.

They want to have MORE than enough money in the escrow account to pay the taxes However, there is a law that they can have too much in there either. I have gotten checks from the mortgage company due to this.

When can I get that back? If I re-fi and get out of escrow? I can take care of my own bills, but they want that escrow there since I am a first time buyer.

I believe that it will be required until you have an 80% LTV ratio.

not true, you can waive escrow, which usually costs .25% at closing.

OK. I didn't know that. I like having an escrow account myself.

 

[GasX]

Originally posted by: spidey07

Originally posted by: Mwilding
$800 every 6 months? I am so jealous. I am buying a house that is much more than that amount PER MONTH! :Q

in taxes!!!!!!!!

you pay over 9600/month in taxes!!!!!!

you live in russia?

I assume you meant 9600/year. Yes, twice that in fact...

 

[spidey07]

20K in taxes?

holy smokes. I would have to have about a 5 million dollar home to get that high.