Assessment up by 8.7% for 2016. What to expect?

[FerrumB5]

Hi Folks,

my assessment went up by 8.7%, what should I generally expect? The assessed value is below purchase price. How does it affect the tax and how will the lender know (I have escrow) what to pay to the city? It's my first house and I've been here for only 4 months so I don't know much about this stuff yet

Thanks!

[CashFlowDiaries]

You should expect your mortgage payments to go up next year.

The lender will know when they have to pay the tax bill at the end of the year.  When they see they are short, they will raise your mortgage payments for the next cycle to catch you up.

Does that make sense?  This is a common occurrence espcially in hot markets. My taxes go up every year unfortunately and so does my darn mortgage payment!  It sucks!

Typically you can limit the amount your taxes go up by filing a homestead exemption with whatever county you live in.  If you have not done this yet, you should look into it.  It can help.

[FerrumB5]

Makes sense. Do taxes go up linearly with assessment?
I pre-paid 2.8k to escrow to account for raises. Will they start taking money out of this bucket or will they still raise mortgage?

[iamlindoro]

Your escrow is money earmarked for upcoming tax and/or insurance payments, so they'll pay out of that amount first.  Your escrow account could end up negative if it contains too little to cover the bill.  Technically speaking they *could* ask you to immediately cover any deficiency.  More often than not, they simply adjust your payment amount to allow for them to recover the deficiency and to have enough to cover your next payments. 

It's really no big deal, and usually just sorts itself out.  They'll send you a letter about your new payment amount, and how they calculated, and you'll begin paying that amount as of a given date.