When you are preparing for closing on your brand new home, there are a few things to keep in mind as you evaluate the payment estimate provided by your Lender. In most cases, the recorded property tax for the home is based on unimproved property (the land only) because the home is new and the improved property (land and house) has yet to be assessed by the county. The scenario results in the property tax, on record, to be especially low and forces the Lender to estimate what your property tax might be.
At the time of sale, in Florida, all homes are assessed by the County Tax Appraiser. This results in the final tax bill, for the year of purchase, to reflect the tax due on improved property (house and land) for the entire year. And although the Builder will have credited you, the buyer, for property tax due from January 1st to your closing date, they may only credit you on the unimproved tax rate. This will surely result in a shortage in your Escrow Account balance.
When there is a shortage in your Escrow Account, the Lender will be forced to annualize the shortage and add that amount to your future monthly payments. This increase in your monthly mortgage payment can be devastating. To avoid a shortage in your Escrow Account it is imperative that you take a more realistic approach to your estimated payment and opt for the Lender to estimate your monthly escrow payment at the full improved property rate and WITHOUT a potential Homestead Exemption (even if you intend to file in January). An alternative option is to anticipate a shortage and put one hundred ($100) dollars per month into a savings account to be used if a shortage does exist!