Tampa Mortgage: Escrow Information for Tampa Consumers
"The mortgage payments on my new Tampa home increased $300 this year!" This is a common phrase here in the Tampa Bay area. Many buyers are currently experiencing the pain of an increasing mortgage payment because of an escrow shortage.
Why Does This Happen?
When a mortgage lender calculates your escrow payment, they base the tax escrow on the most recent tax bill. Let me give you a hypothetical example:
123 AnyStreet, Tampa~
2006 Taxes - $3,219.00 (based on a taxable value of $150,000)
Now, for the mortgage lender to calculate what the escrow payment will be, they take the yearly tax amount and divide it by 12 (for 12 months). So, in our example the monthly tax escrow would be $268.25 ($3,219 / 12).
How Does the Mortgage Escrow End Up With A Shortage?
The biggest pitfall has to do with the taxable value. Let's continue to use our example. Say Mr. And Mr. Buyer of this home on AnyStreet purchase this home for $350,000. The previous taxable value was much lower because that owner had a Save Our Homes tax break and had lived in their home for many years. When the Buyer's get their mortgage, their payment is based on the old tax bill. Well, a year later, when their next tax bill comes due, it has gone up to $6975.00 per year! What an increase!
Now, they only have roughly $3400 in their escrow account. The mortgage company will go ahead and pay the higher tax bill. However, now the Buyers have a shortage in their escrow account!
How Does This Make the Payment Increase?
If we continue with our example, the buyers now have a shortage in their escrow account of $3,575.00. The lender gives them the option of paying it off in one lump sum or paying it monthly. The monthly payment will be $297.92 ($3575 / 12).
On top of the shortage, their new tax escrow is based on the new tax bill $6,975 per year, or a monthly escrow of $581.25.
See what happens, now the total escrow payment for taxes is $879.17, versus their original $268.25...a difference of $610.92 a month! Could you handle that kind of an increase in your payment?
The important piece here is making sure you get the full story from your mortgage lender. They should be explaining to you what will happen to your taxes, based on the taxable value and be able to give you some insight on any major increases over the next year.
If you are looking for a home in the Tampa Bay area and would like to work with a Tampa Mortgage professional who has your best interests in mind, please email me at LRoss@AmeriFirst.com for a complimentary consultation.
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Tampa Bay | Hillsborough County
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Have you or a past client had a similar experience? Comments Welcome!