TIP OF THE DAY: Double Check Your Taxes!
Hey folks, this is especially important for those of you who have bought a NEW house this year or last year and have an escrow account.
Here’s what we see happen way too often. Since during part of the year the home was built it was an empty lot, the initial escrow account is often based on the lot value rather than the home value. HERE’S YOUR SIGN: if your taxes on that closing statement appear to be $89 per month, you have NOT had a visit from the escrow fairy. Everything is bigger in the great state of Texas, including the property taxes.
If this happens and you don’t seriously adjust your payment to cover what the actual taxes should be, it’s going to be a painful shock when your lender notifies you that your payment is going up $500, $700 or more to make up for the escrow shortage.
And if you ever get a check from your mortgage lender for an escrow overage, don’t spend it thinking you got a gift – your mortgage lender will be wanting it back when taxes adjust to their proper level and your escrow overage becomes a shortage.
Why does this happen so often? It’s because when you get your closing statement, most people just look at the bottom line on page 1 – cash for closing. If it’s about what you thought or lower, that’s all most people look at. You need to look at page 2 of the closing disclosure, to see the monthly amounts being put into your escrow account. THE DEVIL IS IN THE DETAILS!