Lender really misestimated my Property Tax on Loan Estimate, now I owe $2300 more in closing costs.

[Anonymous]

So we are buying new construction. We started the process in November 2015 and knew that the house would be built and close around June/July 2016. We live in Florida.

In November we went with a lender who gave us an estimate of $6000 in Closing Cost. On the official Loan Estimate, they estimated that the Property Tax for escrow at close would be $1500 (3 months worth of tax). OK,  looks good, we thought.

In March, we added some more options to the house while it was being built. That increased the Closing Costs to $6500. We got another official Loan Estimate and it listed the same Property Tax at $1500.

Now here we are one week from close. We got our Closing Disclosure today and we were SHOCKED to see that the Property Tax is now $5500 (11 months worth of tax). Now we owe an addition $2300 in closing costs for a total of $8300 (it's not $10,000 total because of an offset credit from the builder for something else). ONE WEEK before closing they give us this crap.

Come to find out, after doing some research, they should have estimated us at 10-11 months for Property Tax at $5500 from the beginning, because that is when the house was estimated to close, but instead they kept the initial estimate at 3 months, which is what it would be for a November closing date (which is the month we STARTED the application and build).

So either one of two things happened:

1. The Loan Officer made an honest mistake on the estimate

2. The Loan Officer purposely gave us a lower Property Tax estimate on purpose to make it appear that the closing costs were lower, thus "hooking" us

Here's my question.... do we have any options here? We have $22,000 in non-refundable money on the line with the building.... we can't walk over $2300 just to loose $22k.

Can a Loan Officer give us a credit or fix this for us in any way so we are closer to our estimate? Anyone experience anything like this before? This just seems [I]really[/I] shady to me for the lender to do this to us.

Ethan

[Appleman]

Sorry to hear about this last minute change leaving you on the hook for $2,300. With one week before close it would be impossible (IMO) to find another lender without moving the closing date.

I am assuming the money is tied up with the builder in upgrades etc? On the plus side, this sounds like it would be money you would owe anyway, just unfortunate that the LO dropped the ball with the estimate. It does not sound like there are any added fees or charges, just a tax issue.

Hopefully you have the funds (I know how closely every penny is accounted for during the mortgage process) and can go ahead and close. 

Good luck and let us know how things turn out.

[Anonymous]

We just figured everything out with the lender. They were estimating that the Property Taxes we'd owe were based on the land+house tax value, when they should have been basing it just on the land value alone because the house was under construction until this month. We will be due a refund of about $2500 at closing, rather than having to pay $2400. We had to sign a simple form that just changed the calculation method to lower the escrow amount and that was all there was to it. Mistake by the lender for not catching it, but he fixed it for us ASAP.

[Anonymous]

Just make sure you are prepared for the tax increase when your escrow account changes. For me it happened approx 10 mos into my loan. My payment jumped a lot and rocked my world.

[Appleman]

Relieved to hear things worked out in you favor.

[Anonymous]

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@Anonymous wrote:

So we are buying new construction. We started the process in November 2015 and knew that the house would be built and close around June/July 2016. We live in Florida.

In November we went with a lender who gave us an estimate of $6000 in Closing Cost. On the official Loan Estimate, they estimated that the Property Tax for escrow at close would be $1500 (3 months worth of tax). OK,  looks good, we thought.

In March, we added some more options to the house while it was being built. That increased the Closing Costs to $6500. We got another official Loan Estimate and it listed the same Property Tax at $1500.

Now here we are one week from close. We got our Closing Disclosure today and we were SHOCKED to see that the Property Tax is now $5500 (11 months worth of tax). Now we owe an addition $2300 in closing costs for a total of $8300 (it's not $10,000 total because of an offset credit from the builder for something else). ONE WEEK before closing they give us this crap.

Come to find out, after doing some research, they should have estimated us at 10-11 months for Property Tax at $5500 from the beginning, because that is when the house was estimated to close, but instead they kept the initial estimate at 3 months, which is what it would be for a November closing date (which is the month we STARTED the application and build).

So either one of two things happened:

1. The Loan Officer made an honest mistake on the estimate

2. The Loan Officer purposely gave us a lower Property Tax estimate on purpose to make it appear that the closing costs were lower, thus "hooking" us

Here's my question.... do we have any options here? We have $22,000 in non-refundable money on the line with the building.... we can't walk over $2300 just to loose $22k.

Can a Loan Officer give us a credit or fix this for us in any way so we are closer to our estimate? Anyone experience anything like this before? This just seems [I]really[/I] shady to me for the lender to do this to us.

Ethan

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We sure did!  I seen it coming and was prepared.  They actually needed to add your taxes, CDD's (if any), HOA"S (if any) & insurance into whay you will need to close.  Ours jumped up quite a bit at the day of closing.   Don't forget to apply for Homestead excemption.  It helps and protects your investment from everything credit wise except contruction liens & tax liens.