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post #1 of 23 (permalink) Old 10-24-2008, 07:23 PM Thread Starter
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mortgage question...

I was just ready to pay my mortage payment and noticed it went up 25 dollars a month. This is my first home so i'm not sure but is this normal? I have a 30 year fixed loan.

thanks.

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post #2 of 23 (permalink) Old 10-24-2008, 07:29 PM
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Maybe the escrow went up? Was there an increase in insurance, or taxes?

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Last edited by Piercedqt78; 10-25-2008 at 02:16 AM.
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post #3 of 23 (permalink) Old 10-24-2008, 07:39 PM
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it is very normal for your second year for the mortgage to go up. Small chance it goes down in year three once you have your escrow reserves.
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post #4 of 23 (permalink) Old 10-24-2008, 08:08 PM
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The only way a Mortgage Payment can really go up on Ammortized payments are Tax or Insurance corrections/adjustments or you are possibly on an ARM structured loan.

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post #5 of 23 (permalink) Old 10-24-2008, 11:42 PM
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Escrow adjustment most likely. If it only went up $25 you're lucky. For both of the houses I've bought, the payment jumped 80+ after the first year, but dropped a bit after the second. The companies have screwy ways of figuring the escrow, and often under-estimate the first year. That leaves you short after a year, which the mortgage company tacks onto the next year's payments.

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post #6 of 23 (permalink) Old 10-25-2008, 12:02 AM
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what everyone else said... probably an adjustment in your escrow to account for an increase in taxes/ins. ours was so behind b/c it was new construction i just closed our escrow and will pay it ourselves, that way no surprise increases in monthly payments.
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post #7 of 23 (permalink) Old 10-25-2008, 10:59 AM
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Well my guess is that the mortgage company just got your tax bill and had to adjust upward because your lawyer low balled the tax estimate when you closed. To be fair, he was pretty close as they are usually off more than that.

In IL we pay taxes for the previous year so homes were still rising in value a year ago in some places. Your tax bill reflects that. Also it could be because whoever you bought the house from might have had a homeowners exemption which would make the tax bill they gave your lawer who estimated your payment low. You'll get that same exemption after you've been in the house for a year or so.

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post #8 of 23 (permalink) Old 10-25-2008, 11:11 AM
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Probably damn real estate taxes!

Your increase is most likely due to property taxes rising as they do most years. Try talking to your mortgage company and see if you can get the RE tax bill sent directly to YOU. That way you can 'pay yourself' the taxes and by putting a little away yourself in a savings account you get the interest too! I know its not a lot of interest, but at least you'll get it and not the greedy bank! All I needed to do was annually go in and show the PAID taxes and my bank was happy enough. They don't smile, but are satisfied really as long as the taxes are paid and no liens or penalties go on the property.

Also, have you caculated how much $100 more per month can save you in interest in just a few years? It shortens the life of the loan and drops hugely the amount of interest paid for the loan. Then again you can begin to PAY YOURSELF the interest. Its hard, but easier than double payments and saves thousands of dollars!!
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post #9 of 23 (permalink) Old 10-25-2008, 11:42 PM
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Your increase is most likely due to property taxes rising as they do most years. Try talking to your mortgage company and see if you can get the RE tax bill sent directly to YOU. That way you can 'pay yourself' the taxes and by putting a little away yourself in a savings account you get the interest too! I know its not a lot of interest, but at least you'll get it and not the greedy bank! All I needed to do was annually go in and show the PAID taxes and my bank was happy enough. They don't smile, but are satisfied really as long as the taxes are paid and no liens or penalties go on the property.

Also, have you caculated how much $100 more per month can save you in interest in just a few years? It shortens the life of the loan and drops hugely the amount of interest paid for the loan. Then again you can begin to PAY YOURSELF the interest. Its hard, but easier than double payments and saves thousands of dollars!!

Lots of lenders won't do this. Technically, they own your house till its paid off in full so why should they risk you not paying the taxes on it and some fella off the street buys it up for the back taxes.

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post #10 of 23 (permalink) Old 10-26-2008, 10:43 AM
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Once you got a loan that has an escrow you can not remove escrow. banks charge 1/4 point for you not to have an escrow. It is their insurance policy that taxes are going to be paid.

Jason. Look closely at the last bill. It should explain clearly where the money are going. You can compare it to your last month bill.

You are in Boone County. Your taxes just got paid in Sept. New tax bill is not yet ready and bank has no way to know how much it will be. So, there are only 2 things that can legally raise your payment if you are locked in in a 30 yrs loan.

1. They think it will go up and they are estimating that you are short on money.
2. Your insurance might have went up a bit. Or they think it will.

If you still have questions You can either call your mortgage agent or your your loan company.

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post #11 of 23 (permalink) Old 10-27-2008, 08:41 PM
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Quote:
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Once you got a loan that has an escrow you can not remove escrow. banks charge 1/4 point for you not to have an escrow. It is their insurance policy that taxes are going to be paid.
Spot on! It's a Safeguard for the company and yea 99% of all Lenders will Hit u 4 anywhere from .25-.50% if you were to Opt out of the Escrow's....

(Not to mention that within the last few years, If you are over a certain LTV/CLTV Usually 90%+ most lenders Fannie or Freddie will Mandate that you must have escrow's taken out monthly) This is Because High LTV/CLTV loans carry a higher default risk and Tax leans take presidence over any other if they were to go into a derogatory state.

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post #12 of 23 (permalink) Old 10-27-2008, 10:07 PM
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Quote:
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Once you got a loan that has an escrow you can not remove escrow. banks charge 1/4 point for you not to have an escrow. It is their insurance policy that taxes are going to be paid.
I was able to do it for some reason and our APR didn't change and payments are the same as they have been since day 1.
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post #13 of 23 (permalink) Old 10-28-2008, 12:57 AM
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I was able to do it for some reason and our APR didn't change and payments are the same as they have been since day 1.
Well its not a law or anything but the rule of thumb is that they won't let you do this, especially if you have less than 20% down.

That said, my 1st condo I didn't put anything down and they didn't require an escrow. This was with Harris bank but my aunt was a broker and knew the branch VP in Palatine. Harris underwrote the loan themselves.

I'd say that was a special scenario.

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post #14 of 23 (permalink) Old 10-28-2008, 10:04 AM
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Quote:
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Once you got a loan that has an escrow you can not remove escrow. banks charge 1/4 point for you not to have an escrow. It is their insurance policy that taxes are going to be paid.
Not always true, and refinancing is simple even in these markets with the right credit.

There is no 25bps bank penalty for holding your money until its due. For those that believe it to be true, I have a bridge to sell you at pre-construction prices.
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post #15 of 23 (permalink) Old 10-28-2008, 10:08 AM
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Spot on! It's a Safeguard for the company and yea 99% of all Lenders will Hit u 4 anywhere from .25-.50% if you were to Opt out of the Escrow's....
More bad info....dont believe it. Sure they all have their internal dynamic risk parameters, but you are generalizing the industry. Stop quoting subprime lenders....shop around.
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post #16 of 23 (permalink) Old 10-28-2008, 11:29 AM
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How long should one wait to refi after purchasing?
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post #17 of 23 (permalink) Old 10-28-2008, 11:36 AM
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Until it makes sense financially. Benefits > Costs

You mean from a credit report perspective Jack?
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post #18 of 23 (permalink) Old 10-28-2008, 12:20 PM
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Quote:
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Until it makes sense financially. Benefits > Costs

You mean from a credit report perspective Jack?
Well, I guess. I've always thought that one should wait x amount of years before they refi. I'm not too concerned about a few points coming off my credit, as my scores are in great shape.

What kind of costs are associated with a refi? When I bought, I walked out of closing up about $2000.00

The lending climate has changed dramatically since then, and I've donned my tin foil hat and pulled out of banking. I haven't had a bank account since january. I have a safe deposit box and that's it.


BTW, my escrow was short $1500 this year. I was on a pretty tight budget before, and this is not helping the cause any.
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post #19 of 23 (permalink) Old 10-28-2008, 01:07 PM
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Jack...start here. Im not a mtg broker by any means, but the financial concepts still hold true...Benefits must outweigh the costs.

A simple example,
If you can lower your rate, roll the cost of refinancing into the loan, and retain the same loan type and term to maturity you are heading in the right direction.

Check this site out...
http://www.bankrate.com/brm/calc_vml/refi/refi.asp
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post #20 of 23 (permalink) Old 10-28-2008, 01:13 PM
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I worked out a deal with your mortgage company for everyone on the board. It's going to my bike fund. Rest assured it's going to a good cause.

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post #21 of 23 (permalink) Old 10-29-2008, 02:47 PM
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Quote:
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More bad info....dont believe it. Sure they all have their internal dynamic risk parameters, but you are generalizing the industry. Stop quoting subprime lenders....shop around.
Not bad info, Well advised info.... The majority speaks and I was a loan officer. 99% of the time company pricing matrix's will have an applicable charge of .25% or higher for escrow waiver fee.

Now whether or not the loan officer "Eats" it or you as the consumer get charged for it on your GFE, thats the question.... I for one can tell you I rarely took that hit as the loan officer

Quote:
Originally Posted by Kruz View Post
Jack...start here. Im not a mtg broker by any means, but the financial concepts still hold true...Benefits must outweigh the costs.

A simple example,
If you can lower your rate, roll the cost of refinancing into the loan, and retain the same loan type and term to maturity you are heading in the right direction.
And I can also say that not only do I agree with you on this but it's always important as a consumer to take into consideration "NTB's" and "Recap Period"

Tom

Last edited by IceCold81; 10-29-2008 at 02:50 PM.
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post #22 of 23 (permalink) Old 10-29-2008, 02:49 PM
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Im sure you are paying for it currently.

Glad I have a MB that treats me well.
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post #23 of 23 (permalink) Old 10-29-2008, 02:57 PM
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Quote:
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Im sure you are paying for it currently.

Glad I have a MB that treats me well.
Not by any means

But I'm glad you have a reliable MB'r in your corner..... Just know that there is A LOT that goes into the bottom line Rate/cost's built into a loan.

A GFE is as good as the MB that structures it. I got out of the business because it is one of the most cut throat/predatory markets of our economy........ IE: The largest reason for all of what we are paying for RITE THIS MOMENT "A Reactive/procrastinating Economy"

If the government stepped in Long Before now to regulate all the predatory lending that was going on over the last UMTEEN years and stopped giving LO licenses to ANYONE WHO COULD READ AND/OR WRITE we would not be at the foreclosure rates were at now and def. not even close to as volatile as things have become........ Point is I could go on and on about this but I won't..... I removed myself from an industry that wasn't worth being part of........

AND I'M GOOD!

Tom

Last edited by IceCold81; 10-29-2008 at 03:03 PM.
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