That one time the mortgage company didn’t pay my property taxes…..

It started like this…

A couple of weeks ago, I came back from a trip. My husband had plopped the mail down on the couch, so I sat down and started going through it. A bright pink postcard immediately caught my attention so I picked it up. “We have still not received your property taxes! Please pay immediately to avoid further fees!” I logged into my county’s tax site and sure enough…my property taxes were 3 months past due and had gained some pretty hefty late fees.

Hmmmm…Weird.

Next, I logged into my mortgage account and started going through the documentation. Escrow was paid every month like normal. I had a receipt in my account saying property taxes were paid.

Enjoying a latte with no idea that my property taxes are delinquent.

I started going through all of the transactions in and out of my escrow account to see how much our mortgage company paid in taxes. There were some serious discrepancies. The amount they actually paid was thousands less than it should have been. In fact, it looked like the county sent the refunded the tiny amount that they HAD paid. Awesome.

So I called the Mortgage Company…

The Nice Man at the Mortgage Company assured me that yes, my taxes were paid in full and that he would have his team investigate why the county/city tax office was saying they hadn’t received any money yet. “One more thing,” he said as I was about to hang up. “I see that you are about to receive a large check in the mail for overpayment into the escrow account. Please don’t do anything with it until we get this sorted out.”

Trust me ma’am. Everything is fine!

“Ok. How large are we talkin here?”

He quoted me the EXACT AMOUNT of money I paid into escrow for all of 2016 and then some extra. Naturally, I was shocked. I calmly told the Nice Man that had to be wrong and explained why. Our conversation went south fast.

“We’ll have to call you back. Someone will call you back”. He couldn’t not wait to get off the phone and practically hung up on me (seriously).

Stack of Benjamins that apparently didn’t get paid towards my taxes.

Hmmmm….Not cool.

I called back again the next day to follow up on the “investigation”, and finally talked to someone who wasn’t so eager to get off of the phone. He agreed that something definitely was wrong and that they would investigate. I also double checked to make sure that Mortgage Company would pay for any late fees that had accumulated in 3 months. He assured me that they would be responsible.

Finally, after two weeks, my Mortgage Company admitted they were at fault and quickly paid my taxes. They also paid all of the delinquent fees out of their pocket and apologized for their serious error. Apparently, they had calculated the correct taxes originally, but their software somehow sourced the wrong plot of land. (Why is it always the computer’s fault?)

Is this normal?

Since this has never happened to me before, I called someone I trust who is familiar with the banking industry. They told me that this kind of thing does happen, but that there are lines in my HUD-1 that states that the lender is required by RESPA to apply or pay your property taxes on time. I checked my closing docs and found the line that they were referring to.

Checking the fine print

Fortunately, in my case, things were fixed quickly. My Mortgage company admitted fault, and I was not held liable for any damages. Things could have been a lot worse.

If your mortgage company doesn’t pay your taxes, they could get in trouble. So could you. Here is an article written about steps you can take to get any property tax issues fixed. According to credit.com, I probably should have handled this situation by getting things in writing and not over the phone. Things to note for the future…

Lessons learned…

While I’m glad that everything is fixed, I’m a little wigged out by all of this. This is a major banking institution that messed up….Most people have heard of them and I considered them a safe bet. But their screw-up could have really caused some serious problems (like a lien on my house!).

Lady checking up on her mortgage company after reading this post.

This is just one example of why you should alway watch your accounts. No one from the Mortgage Company even realized they had made a serious mistake. I should have paid attention to the amounts taken out of my escrow account and questioned why they were so low. I should have gone to the county’s tax website to make sure that my taxes were paid. Now I know….

Has your mortgage company ever screwed up your property taxes?

Why moving to Texas was an awesome idea

SPRING!

Today is glorious. I’m sitting in my living room with all of the windows open. The fresh air is rolling in, and the birds are chirping outside.

Spring is my favorite time of the year. Its nice and sunny out, but temperatures haven’t sky-rocketed. Texas springs start earlier in the year so the blue bonnets have already started to bloom…. All while my east coast friends were talking about the snow they got a couple of weeks ago.

Feels amazing outside right now. My tune will change in August.

 

Why we moved…

We’ve been in Texas for a little over a year now. I miss my friends and my family a lot, but we moved to Texas with a purpose. We wanted to lower our cost of living so we could pay off debt faster. I had job opportunities in different states, but we decided that Texas was the place for us. Here are a few of the reasons why moving to Texas was such an awesome idea:

  • We lowered our taxes. Texas is one of the few states that doesn’t have any state income tax so we save thousands of dollars a year on income taxes alone. Our property tax is technically higher than our east coast state, but the properties aren’t worth as much here so we broke even on property tax.

  • Housing is cheaper. The house we bought here was significantly cheaper than an equivalent home on the east coast. I’m not sure about the numbers, but I do know that our current home was around 40% cheaper than our last home. We SHOULD have purchased a smaller/cheaper home in Texas to be honest. They do exist! Our original plan was to rent for a while to give us time to shop around, but we found the rental market to be competitive and more expensive than buying.
  • Utilities are CHEAP! Part of this is because utilities are just cheaper here  …Part of this is because our home is well insulated. Regardless, even in the stupid hot temperatures of a Texas summer, our electric bill is a quarter of what it was before we moved.

Just a couple of Cons…

A couple of our expenses have increased. We spend more money on gas. We both commute to work so we spend a lot more time in our cars. Gas is cheaper here, but not enough to offset the increase in driving. This is something that we would like to change in the future. We also pay for water here (our last home had well water). Still, both of these costs are small compared to the overall decrease in our monthly expenses.

Still happy with our decision

At the end of the day, I’m happy we moved. My rough estimate is that we’ve saved about $1000-$1400 a month by lowering our cost of living. Now, I get that moving to a new state may not be feasible for everyone for many reasons. But for us, this move was perfect. So far, we’ve paid off one car and are about to pay off the second. The student loans are next.

How about you? Would you consider moving to a new state to pay off debt faster?

Why buying our first house was a terrible idea

I’ve read multiple blog post about people who have widely varied (and sometimes very passionate) opinions on real estate. Some people think buying a home and paying off debt is the only way to go. Others chose to rent and invest all of their extra cash.

However, most people will agree that buying more house than you can afford is a truly terrible idea. And Mr. Cents and I agree wholeheartedly…..because we did it. We bought a house that was more expensive than we should have. In fact, it was one of the reasons why we left the east coast for a cheaper cost of living area.

I remember the “logic” behind our decision. We were renting a little townhouse, because the housing prices in our area were too high. Buying wasn’t feasible even though we were both had good jobs. After the 2008 market crash, prices started dropping like crazy…Still way higher than the national average, but lower than we had ever seen. Also, we had a family member who was living with us, and things were feeling a bit cramped. And we are adults, right?! Adults buy houses.

Then, the articles came out after the market crash. “INTEREST RATES ON THE RISE! BUY NOW BEFORE IT’S TOO LATE!” I started to panic. We needed to buy immediately. Otherwise, we would never be able to afford to live in this area, and we’ll be stuck in this rental FOREVER!

So we started house shopping…We drove around some of the neighborhoods we liked and found a lovely home on a half acre lot. My husband loved it. It was older but had been well kept. Had a large backyard with multiple gardens and a lovely porch. The rooms were small but still decent-sized. Three bathrooms. Lots of yard. But it was about 80K more than what I wanted to spend, and I didn’t like the small rooms. But Mr. Cents loved the neighborhood, and we both liked the gorgeous backyard….so we put in an offer.

Worst Mistake Ever.

Now folks, let’s keep in mind that Mr. Cents and I had never purchased a home before. We were starry eyed and hell-bent on adulting like we thought we should. We didn’t not think this through. We did NOT take into the account the following issues:

  • Buying a house is expensive. We didn’t have enough for a full 20% down payment so that meant our monthly payment was higher than we expected. Especially when buying a house that was 80k more than we planned. We almost doubled what we were paying in rent.

  • Old houses are old. That means that they leak air conditioning during a muggy summer and suck the warmth right out of your bones during the winter. Our electric bill doubled from the townhouse, and that was during the good months! I remember one particularly bad month when the electric bill hit $550. That was after regulating our thermostat to the point where the inside of the house wasn’t comfortable anymore. I turned into an old man, yelling at people to “TURN OFF THAT LIGHT!” “SHUT THAT DOOR YOUR LETTING OUT THE FFFFF AIR! WHAT AM I MADE OF MONEY?!!!!” It was unpleasant. I remember the one winter that we tried to lower the thermostat to like 65. The actual temperature dropped lower than that, and both Mr. Cents and I started to get sick so we had to bump the temp up.
Thermostat setting during the summer months
  • Houses require maintenance. Most people know this one. However, most people probably don’t seriously underestimate how MUCH maintenance a home requires. Not like us…oh no…we were not prepared for the shower that caved in because whoever installed it used expandable foam to hold it up. Or the time lightening struck our well pump. Or the time the giant tree in backyard broke in half and smashed one of our flower beds (not the house, thank goodness). It was one thing after the other.
  • Taxes SUCK. This we knew it was going to happen, but we were still surprised by how much of our monthly payment went to property tax.

 

With the mortgage and our other bills, we couldn’t get ahead financially. Even with two good salaries, we were living pay check to pay check, and we felt like we were drowning.  After a couple of years of house-poor living, we decided to call it quits and look for a way out. We started looking for job opportunities outside of our high cost of living area. My job offered me an opportunity to move to spot in Texas with a significantly lower cost of living, and I took it.

Thus begins our journey to be debt free! Buying that house was probably the worst financial move we could have made, but it was good for us in the long run.  We needed to learn the hard way that what everyone else says is normal isn’t always best. If we hadn’t bought that house, we never would have looked for a way out. Never would have found blogs about living debt free. Never would have even thought that early retirement was a thing. These days, we are making positive changes towards reaching our financial goals. For the first time in a long time, the light at the end of the tunnel isn’t a train of financial hardship. Its just a way out.