Should you Escrow Your Property Taxes?

Should you Escrow Your Property Taxes?

For many new homebuyers in Fort Myers, escrow of their property taxes can be a confusing topic.  Some wonder if they need to do it.  Others may be unsure how their property taxes actually get paid.  Escrowing your property taxes is actually a very simple concept and a common way to pay your property tax bill.

A Simple Savings Plan

UntitledWhen you escrow your property taxes what you are really doing is setting aside money little by little every month for the sole purpose of paying your property taxes or homeowners insurance premiums, or both.

Each month your mortgage payment will include an extra amount that is designated for escrow.  The amount and its purpose will be clearly visible on the mortgage statement so you always know how much is going in to the account for tax or insurance purposes versus how much of your payment is going toward principal and interest.  The amount of money designated is based on the most recent year’s tax bill.  The actual amount may fluctuate a bit from year to year, but overall the numbers are usually right on target.

These funds then sit in a specially designated account at a bank or other financial institution.  The account is usually set up as part of your mortgage agreement and typically resides with the same institution that holds the mortgage on the property.  It’s important to understand that the funds in this account cannot be used for any other purpose than the use that is specified in the mortgage documents.  Your escrow account is not a savings account that can be accessed by the homeowner or lender and used to pay other bills.

The Lender’s Role

Your mortgage lender plays a significant role throughout this process.  From setting up the account to determining how much money is to be put into it every month to actually paying the tax bill on your behalf, the lender is intimately involved in property tax escrow.  All you have to do is pay your monthly mortgage bill.

In Florida, your mortgage lender may require you to escrow funds for tax and/or insurance premiums.  This is similar to the requirement in Fort Myers of title insurance being required by the lender.  The actual terms vary from state to state and depend on the conditions of your mortgage; your lender will be able to advise you as to whether or not you need to escrow your taxes.

If you escrow your taxes, your lender will make a request to the taxing body that the tax bill be sent to their offices.  Once that bill arrives, the lender makes the property tax payment on your behalf.  Throughout all of this you will be kept apprised of the status of the tax bill.  You can expect to receive a notice of property taxes due and also a statement once they’ve been paid.  If you do not receive these documents you should check with your lender that the taxes have been paid because you are still ultimately responsible for payment.

Escrowing your property taxes is one of the easiest ways to ensure you have funds available to pay your taxes when they are due and it’s relatively painless way to do so.  Working with a lender you trust will ease any concerns you may have regarding the process.

Title Junction is a full service real estate title company serving the area of Fort Myers, Cape Coral and the entire state of Florida since 2005. The company handles a number of real estate title services for both commercial and residential properties. Employees of Title Junction can also act as a witness in courtesy closings as well as an escrow agent or a notary public.

Please contact Jennifer Ferri of Title Junction, LLC for further information @ 239-415-6574 or www.title-junction.com

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Posted on October 4, 2013, in Title and tagged , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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