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I live in a new residential development, so new that only 5 of the 16 houses on my street are finished. The city has sent us letters saying that our specials are going to go up as they install street lights and other construction around our neighborhood. Currently our specials are lumped in with our mortgage, which was assessed late last summer.

When should I expect our monthly payments on our mortgage to go up as the city finishes the neighborhood? Will it happen automatically when they are done with the construction? Will it happen automatically at the start of the next year? Do I need to go to the bank and have them reassess our mortgage so that it can be taken out?

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    Seems this is going to be jurisdiction / bank dependent. I suggest you call your bank to confirm. I doubt the flow of funds would happen 'automatically', because that would rely on the bank sending money to the city on your behalf without you specifically telling them to. Aug 26 at 16:58
  • I guess I figured if it does happen 'automatically' it would be the city notifying the bank (if the city has that information) that specials have changed. And if any months were missed, it would be caught when we filed our taxes.
    – rhavelka
    Aug 26 at 17:03
  • That implies that either (1) the municipality has the authority to directly charge your bank account without your consent [doubtful] OR (2) you have [apparently unwittingly] signed an agreement within your mortgage itself to agree by default to whatever charges the city applies [also requiring the bank to allow your total mortgage amount to fluctuate by whatever the charges end up being]. Just call your bank to find out how things are done. Also, call your builder. These questions will have come up before; they will have answers for you. Aug 26 at 17:08
  • I will add - it seems most likely that depending on timing of when those charges are levied [perhaps many months after you take possession of the house?], you will have to cover those charges out of your own pocket, or else would have to pay to 'reopen' your mortgage to accept the charges. Aug 26 at 17:14

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In the US, you can agree to paying property taxes through escrow with the mortgage service bank. This ensures that you don't default on your obligations, since the taxing authority can foreclose and would be paid before the bank.

If this a similar situation, then your bank would pay any incoming property taxes from the mortgage payments (which include additional amounts for funding the escrow), and then will automatically increase the mortgage payments if the escrow funds fall below a certain level. This should already be covered by the note you signed.

If you're describing a different arrangement - you'll need to read carefully your agreements with the mortgage provider and understand your obligations to the taxing authority, it's difficult to answer precisely without knowing any of those.

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  • we do have an escrow account with our bank that automatically takes out our taxes. this makes sense on when we would get charged, thank you.
    – rhavelka
    Aug 29 at 14:21
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I have seen these types of items handled as a special tax assessment or a special taxing district. This is used to pay for transportation projects, road projects, and school construction.

What then happens is the group collecting your monthly payments for the mortgage, taxes, and insurance recalculates the monthly payment to cover the additional tax. They base it off the information from the local government. The timing depends on the information from the government, and how often the escrow amount can be recalculated.

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