Current Events > Mortgage company charging twice as much..ever heard of this?

(+) Yeah! (+)

I had a fixed rate. But they said it was a shortage. So now they have up my rate. Is this common. It does not seem right.

Was it an escrow shortage? That is a legitimate thing that can increase your payment, but not your interest rate.

Shortage? Unless the shortage was you not paying the full amount each month over an extended period of time I don't know what kind of "shortage" would result in a rate change on a fixed rate loan.

Did your taxes go up? I think thats the most common cause of this. Was your house a new construction?

But as Giacomo_Hawkins said, that would normally affect how much youre paying in taxes and not your interest rate.

Giacomo_Hawkins posted...

Was it an escrow shortage? That is a legitimate thing that can increase your payment, but not your interest rate.

Yeah it was escrow.

CableZL posted...

Did your taxes go up? I think thats the most common cause of this. Was your house a new construction?

It was new.

Yes. They will temporarily increase it to make up the difference if you were short on taxes or insurance that is held in escrow.

And then of course it will go up permanently if (when) your property values are reassessed and you start owing more in taxes.

Sounds like you had a shortage in your escrow. This isn't uncommon. Your interest doesn't change, but your mortgage can fluctuate every year based on your escrow balance due to changing taxes.

cjsdowg posted...

It was new.

So apparently with new construction homes, the taxes youre paying at first is just for the land. Then when the new appraisal value comes in, that includes the house that is built. Or something like that.

Well fuck. I guess I am going to have to get a new house .

You can pay the shortage upfront to avoid the increase in your monthly payment.

Overages on escrow can also occur, where they cut you a check instead.

Good thing I had an emergency fund. Still is so off putting.

Something happened to me like that. The first year in 2022 was fine, but 2023 the monthly payment jumped 50% due to some escrow "miscalculation". Adjusted the insurance a bit and now it's more manageable in 2024, but 2023 was rough to get through.

Thats hard man.

cjsdowg posted...

Well fuck. I guess I am going to have to get a new house .

Do taxes actually make that much of a difference? My taxes are in the vicinity of $300 a month, so I can't imagine some massive change.

Getting a new house has a lot of costs associated with it, and unless seriously downsizing, I can't imagine saving money, at least not in the short run.

It's common to have a shortage as they are required to have like a two month cushion at all times.

Double check to make sure your insurance coverage is correct. Sometimes insurance lapse and you get stuck with like emergency homeowner's insurance that the bank gets which is stupid expensive.

But as someone mentioned, you can pay the shortage upfront and keep your monthly payments the same.

Lol mortgage. Just pay for your house in cash.

If this is a new house for you, as in this is your first year, you may have had a tax credit drop off that you need to apply for. My second year my mortgage went up by $250, then I applied for a property tax credit that removed 50k off the total value for calculating taxes, dropped back down by $225 the following year.

You should have gotten or will be getting a property value assessment in the mail every year which lists your current exemptions. Typically you apply for this once and it rolls over every year.

Thanks for the advice and tips all, everyone.

My tax return is going to cover most of the one time pay off . But my mortgage will still be higher . That sucks. No more suits. Dammit .

Not only will property taxes go up every year that can cause an escrow shortage but insurance can go up too. Both of these can contribute to an escrow shortage. There has been multiple topics on here lately people have noticed large jumps in their vehicle insurance. I hadnt heard anyone mention their housing insurance but I was curious if it also would be impacted.

My housing insurance and vehicle insurance for the year comes due in April. My property taxes I pay the whole year in September. You can do 6 month intervals but I prefer just to pay the whole year. I pay my house insurance and property taxes directly because I dont have a mortgage/escrow. My house is paid off.

So just last week I mailed in the checks. My vehicle insurance jumped by about $200 for the year and my house went up by about $500 for the year. Between the house insurance and the normal roughly $100 increase in property taxes every year if I would have had a mortgage it would have been short by about $600 and needed readjusted.

But it should be a moderate adjustment. Nothing that should cause any real chaos.

And it is just how cold that this did. Just going to jack up like nothing. I might even have to get an second job for this bullshit.

Have you put in for a homestead exemption?

My Mortgage did that once when Chase(it was my grandfathers bank of choice, who help me, otherwise I wouldn't have touched Chase or Bank of America) accidentally paid my summer taxes twice in one year, and then upped my payments because of the escrow shortfall. As much as I dislike that it happened that Chase sold my mortgage contract to Carrington, I'm kind of glad to be away from Chase.

CableZL posted...

Have you put in for a homestead exemption?

I have not done that. Thanks for giving me something else to look into.

Here is my plan, you seem to know your shit so please tell me if this is a good idea.

I have a service at my job that can offer finical advice and taxes and budgeting ect. So I will call them first thing on Monday to see if they can help.

Then I will try that homestead exemption

Then I will call the loan people and looking to in loan modification. But this would be the saving grace since that would hit my credit .

King_Rial posted...

As much as I dislike that it happened that Chase sold my mortgage contract to Carrington, I'm kind of glad to be away from Chase.

Isn't odd that can just sell your mortgage.

cjsdowg posted...

Good thing I had an emergency fund. Still is so off putting.

I'd still triple check it.

Double charges (and accounts opened with no knowledge of the owner, until they got charged) is just a fraction of the symptoms that caused the 08 recession.

Everyone else seems to think it's normal/good faith for what happened with your new construction. And that's good news. But still get someone with access to your account at the company to walk you through it at a level you can understand before you cut a check or send a payment.

This happened to us last year, property taxes increase on my house caused my mortgage payment to go up $700/month from the calculated escrow shortage...and then the Texas Homestead Exemption kicked in and we ended up getting thousands back after the next year's tax payment.

It should be illegal but my mortgage company (not based in the state I live in) has a 6-month gap between the payment date of my property tax and the execution date of their annual escrow analysis.

Shortages are common, shortages doubling your monthly payments is not

BignutzisBack posted...

Shortages are common, shortages doubling your monthly payments is not

Seriously, how much of a change was it?
Unless your mortgage was 200 a month I can't see it doubling.
cjsdowg posted...

I have a service at my job that can offer finical advice and taxes and budgeting ect. So I will call them first thing on Monday to see if they can help.

You really need someone to tell you how to spend your money?
If it's free I guess it can't hurt, if they charge money then walk away.

Yeah, my mortgage company did their yearly escrow analysis and came up with a shortage of about $3100. We have elected to pay that shortage outright (and then some) rather than roll it into the new mortgage which would have gone up by $400. The interest rate has held steady.

Our realtor (also a good friend of mine) also reminded us to file a Homestead Tax Credit with the state so more potential savings can come our way in the long run.

cjsdowg posted...

I have not done that. Thanks for giving me something else to look into.

Here is my plan, you seem to know your shit so please tell me if this is a good idea.

I have a service at my job that can offer finical advice and taxes and budgeting ect. So I will call them first thing on Monday to see if they can help.

Then I will try that homestead exemption

Then I will call the loan people and looking to in loan modification. But this would be the saving grace since that would hit my credit .

If that service is free, then give it a shot. Homestead exemption should always be done. I would look into whether there is a deadline to file where you live. I bought my house in late March of 2021 and was told it was too late to file for that year, but I did it in January of 2022.

And this is why I have everything separate.

I am just so sad..because this hit me at the wrong time. Well anytime would have been a bad time for this. But I am failing on my weight loss, and I just spent a hello f lot of money trying to fix up my yard. I even got a lemon tree.

If it's your escrow, you either get it back at the end of the year, or they use it to pay for property taxes (often only half) and/or property insurance on your behalf. Either way, it's money they are holding for you, not money they are keeping

I'm being gentrifed