taxes on a mortgage payment?

Question

Do you pay taxes as part of the mortage or do you pay them once a year? When the lender figures it inot your total payment, is that just so you know how it breaks down monthly, or do you pay the taxes once a month?

Answer 1

That is called an impound account. You can set it up to pay every mo with your mortgage payment or you can hope that you have saved enough all year to pay the bill when it arrives.

If your mortgage coupon shows a tax figure, then you are mailing it in monthly, which is the best thing to do when you are new to home ownership

Best of luck

Answer 2

You actually have the choice. You can pay your taxes and/or insurance payments with your mortgage, or in big chunks when your state requires. Paying them monthly on top of the mortgage is called IMPOUNDING, and your loan will be called impounded. Most states break property taxes down to two or three yearly payments snd insurance can do the same. It is harder for many people to save the money for these larger payments, so often it is smarter to impound. Some loan programs demand that you impound your loans. The biggest advantage to impounding is that you have the money to invest each month untill the taxes are due.

Answer 3

Your taxes usually are due twice a year. Your lender figures them out monthly because they are included in your debt when making credit decisions. Most lenders will allow you to set up an escrow account, and then include your taxes in your payment. In some situations, your lender will actually require this. To set up the account, they usually require 4-8 months worth of taxes when you close the loan.

Answer 4

You usually have the option, if you borrow 80% or less of the value/purchase price of the property. If you do choose to include the taxes in your monthly payment, it goes into an escrow account that your mortgage company sets up, and they in turn pay your taxes annually (or semi-annually, depending on your state). Your homeowner's insurance is normally included as well and is paid the same way.

Usually, when you borrow >80% of the value or purchase price of the property, an escrow account is required by the lender, meaning the taxes (and insurance) are included in your monthly payment.

Answer 5

Depends on how you set it up with your lender.

My lender made me include 1/12th of the estimated annual property tax bill in every mortgage payment. They then hold it in escrow until the property tax is due, and then they pay the government. Where I live, the property taxes are due in 2 installments each year, and the lender pays it at those times.

Other lenders do not require it, and leave the property tax bill for you handle.

Answer 6

If you excrowed your taxes would be included into your house payment, and when you file for your exemptions at the court house, you let them know that you excrowed your property taxes. That way the tax statements are sent to the mortgage company to be paid.

If they are not excrowed, than you will be paying them in May and November. If you are good at saving, you sould put the money each month into a savings account, draw interest on the money, and pay them on time. I have seen many many ppl not have the money on time for their property taxes and than they get charged a 10 percent pentality.

When you get your loan, the taxes and homeowners insurance is figured up to see what your total DTI (debit to income ratio) is. Lenders like to see that you can afford the loan.

FHA and VA you have to escrow your taxes and HO insurance in your payment.

Answer 7

Normally you pay taxes monthly with your payment. A normal monthly loan payment includes principal, interest, homeowners insurance, and property taxes. Each month the lender will apply the principal and interest payments to your loan, then will save the taxes and homeowners insurance payments in an escrow account to pay once a year.

The reason for this is that lenders don't want you to fail to pay your taxes and have the IRS place a lien against your home. An IRS lien takes precedence over their mortgage lien and that makes their loan less secure.

For most of us, it is convenient to have the monthly payment include taxes and insurance so that we don't have to save up the money and pay it ourselves. If you don't like this and want to save it and pay it yourself, most lenders will allow you to pay it yourself, but they will charge a slightly higher interest rate.