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Escrow refund question

We just got a $1000 escrow refund check. 2008 is our first full calendar year in the house.

That's all great...but...our escrow payment is going up $20 a month. That, too is understandable.

My question is, how do both happen? What math is done to determine I'm getting a $1000 refund, then turn around and charge me more per month?

shane's picture
shane | Joined: December 3, 2007 01:41 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

You probably had too much in your escrow account and your lender realized that after they paid your property taxes. So instead of keeping your money and then sometime down the road, years and years, raise your payment by $20, they just are refunding you whatever they currently done need... and then are charging you $20/mo more because your property taxes might've been reassessed higher after you purchased.

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underscore05's picture
underscore05 | Joined: November 2, 2008 05:13 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

What I paid in property taxes last year is the same as this year (based on municipal records for the upcoming year). Home insurance is the same, too.

I guess I'll have to give them a call tomorrow and find out what's up.

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi underscore!

Welcome to the forums!

Yes, I think that will be great move. The lender will be able to explain why he is charging you $20 more after refunding $1000. Do let the forum members know what your lender said.

Feel free to ask if you have further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

How long should I wait for escrow refund check after paying off mortgage? I paid off my mortgage 03/30/09.

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savior70's picture
savior70 | Joined: March 25, 2009 05:14 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi

The federal regulations need the lenders to refund the money held in the escrow account within a month or two after the loan has been paid in full. If you have not received the escrow refund check from the lender within this time, you have the option of filing a complaint with the Dept. of Housing and Urban Development.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I found and old escrow refund check in the amount of $ 16,000.00 payable to me and it was dated way back april16,2006 . my question is can i still claime that money or can they replaced it with a current check dated 2010 ?

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Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Your query has been answered in the given page:
http://www.mortgagefit.com/know-how/about32755.html#142426

Have a look at it. I hope it'll help you.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

A quick call to your lenedr will give you all the answers. Let us know what they tell you?

Laurie Reiss
Financial Mortgage Advisor

[size=9:15280c4aeb][color=Red:15280c4aeb][Email address and contact details deleted as per forum rules][/color:15280c4aeb][/size:15280c4aeb]

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

After paying off mortgage recieved refund, do I claim this as income on taxes

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jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Patricia,

The taxes and insurance payments that you make to your lender is tax deductible. Thus, if there is an escrow overage and you get a refund, you will have to report this as income on your taxes.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I received 8,000 escrow in 2008 and did not think it would be taxable income. IRS now revising my taxes and charging me fo that additional income. What to Do?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Escrow refund is your income and thus the IRS is charging taxes for it. You will have to pay off the taxes to the IRS for the money received.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

were almost on a closing date on june29, 2010. the mortgage company is asking us to bring a cashiers check payable to them. do i have to pay that escrow before closing coz the seller of the house, a brand new hoome told us that we dont have to pay for the closing cost and they will take care of it, only that we have to pay the 3.5% as downpayment which we did. now. the question is , do i have to pay for the escrow, im confused coz even my home insurance , the seller told us that they will take care of it. i have the exact monthly payment for the loan which will start on august 2010 included in the payments are home insurance , property taxes, hoa cost. please help. need to know the facts. tnx
principal and interest and so on. now, why do i have to pay for the escrow since i already make a downpayment and the seller will take care of the closing

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi emerson,

The escrow account will hold your future home insurance premiums, your property taxes, etc. In that case, though the seller will be paying the closing costs, you will have to pay the escrow dues.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

tnx adonis..based on my message above..the figures for the loan is $160,000 and our monthly that we will pay is around $1,200 including property taxes,home insurance, hoa and the principal and interest. mentioned above that we already paid a downpayment of 3.5% w/c is around $7,500 now, the closing cost the seller gave is around $8,000 w/c the seller will pay as part of the closing cost we agreed and we will as they say shoulder another part of the closing cost. question is how much are we going to pay as part of the closing cost as what the title company is asking for us for the escrow.?. any idea or figures how much based on this figures. please help coz i want to prepare for that money they will ask for us to pay.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

You need to get in touch with your lender in this regard. He would be able to help you with the right figures.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Patricia,
Both a refund for overpayment of a mortgage and a refund from an escrow account are NOT taxable. You do not deduct your total mortgage payment including escrow, you can only deduct the mortgage interest and property taxes. Any monies paid in to an escrow account are assumed already taxed by way of a payroll tax so any refunds do not need to be declared as income. The only taxable part of an escrow would be if any interest was paid on the account.

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Jlmurph2's picture
Jlmurph2 | Joined: January 14, 2012 09:25 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I'm only sad it's taken me so long to reply to this original question and sad that so many provide ill information. Underscore, the reason both can happen is because the government forces them to send ANY excess money back in the new year. They actually need the money still (which is why the payment increases the next year). There are also limitations on the amount lenders can take in addition, which again, is why they can't calculate the payments correctly, the first time around, too much government intervention. Does that help? Don't listen to the fools that give you bad information. In no shape or form, did they take too much money from you.

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