Oh man, I may have screwed the pooch on this one, and not in a good way either.
I bought a house a year and a half ago and have been dragging my feet getting down to the county clerk’s office to file for my property tax exemptions. Is it too late now? Is the amount I have overpaid last year rebateable? Any other advice or commentary is certainly welcome.
Note, I realize laws differ from state to state and take all financial information obtained from an anonymous message board with a huge grain of salt.
Obviously, check with your local property tax authority ASAP to see what their policy is on late filing for property tax exemptions and refunds of excess taxes paid.
As a data point, a friend of mine in Cook County IL once managed to have the county not receive the return postcard he sent in to confirm his eligibility for the homeowner’s exemption. He did not find out about it until he got his copy of his property tax bill and his mortgage company notified him that not only did he have to pay them the difference between what was in his escrow account and what was now due, but that they were increasing the amount he would have to pay into the escrow account on the assumption that his property taxes would be the same amount the next year. IIRC it took him the better part of a year to get a refund from the county and get his mortgage company to reduce his monthly payments again.
That’s pretty close to the situation currently lighting a fire under me to get this done. I received my escrow report, realized how much I was paying in taxes, noticed that my monthly payment is going up about $50 for the next few year to make up a difference in the initial projected and the actual expended amounts and remembered I was supposed to file for these last year.
Do you know if the amount he overpaid during the year he waited was rebated, assigned to future payments out of escrow or lost?
This was quite a few years ago, so the details are a bit hazy; I’m pretty sure that the excess tax paid was refunded by the county to the mortgage company, which then either added it to his escrow account or offered to repay all or part of it to him. I remember him complaining about how long it took his mortgage company to reduce his payments once the error was corrected, though.
I think he was also given the option by his mortgage company of applying the refund from the county to the principle on his loan, which he may have done because he was always putting as much extra on his principle as he could afford. I know he paid off a thirty-year mortgage in less than twenty years that way.
I made this mistake when I purchased my first home a few years back. They actually mailed me a check! Their policy was to apply it to the escrow account only, but there was a maximum balance that account was allowed to carry over in the annual review of the account, and they withdrew the excess & sent it to me.
On the downside, I think I confused their computers–my monthly mortgage payments have been yo-yoing up and down every year with changes in the escrow payment amounts. It looks to me like the weirdness of those first two years of the mortgage is making it hard for them to estimate the correct tax payments. Well, that and the insurance payments, which had similar weirdness when my homeowner’s insurance company went under. (A big part of their business was flood & hurricane insurance on the Gulf Coast, you see … Katrina and Rita in the same year was too much for them to handle. I ended up having to pay another company for a year of insurance just a few months after I paid them, with no way to tell if, when, or how much of a refund I’d get.)
I’m finalizing a house sale now (closing scheduled for two weeks from tomorrow) and one of the things I had to get clarified is how property taxes are handled here in Orange County NC. Part of my closing costs include four months reserve toward property taxes which will be payable in early January, and my monthly payments will include 1/12 of the estimated taxes for next year. However, my mortgage broker told me that because of the amount of cash I’m putting down my lender will probably be willing to drop the escrow requirement for property taxes and insurance in a few months, so I can avoid any future possible problems with that.
Escrow accounts are required in Indiana for first time homeowners. I kinda like it really. The CReEP (Constantly ReEvaluating Payments) is a little annoying but I don’t have the hassle of writing checks for taxes and insurance. Although I won’t be suprised when, after claiming my exemptions, the payments stay the same for an insane amount of time.