How the Pain of Property Taxes is Eased!
According to The Urban Institute via CNBC, millennials are less likely to be homeowners due to student loans, waiting to get married until age 30, and paying high rent for long periods of time.
Individuals without a ton of money (like myself) don’t buy homes because:
The Closing Cost
The Down Payment
The Cost to Move
The Getting Settled Cost
The Cost of Property Taxes
are expensive altogether.
However, purchasing a home is still a great investment in the long run especially if you buy in an up and coming area where the value of your property can rise over time.
I just had a scare. When the property taxes were right around the corner in Cobb County, Georgia I wasn’t sure I’d make it to Halloween. My heart dropped when I opened that bill from the county even though everything was explained to me by my mortgage company and my real estate agent (Hey, Michelle).
However, all of my future pain was eased by simply reading about my escrow account.
Read below to see what I found out.
Mortgage companies/ lenders are not willing to take the risk the homeowner will not pay their property taxes, which are usually due once or twice a year.
To help combat the issues of borrower’s having issues with paying the taxes, mortgage companies tend to set up an escrow account in their name and it is usually mandatory under the mortgage terms.
Lenders establish the escrow account to pay:
Your monthly payment includes the escrow account amount as well as the principal and interest portion of the mortgage account, however, the money for the escrow account is deposited separately.
The amount of money that goes into the escrow account is estimated by the mortgage company/lender on a yearly basis.
If the lender underestimates you have to pay the difference (typically, the lender will spread out payments over a year).
If the lender overestimates, you get a refund.
Property taxes will change over time so will your escrow.
You can claim the deductions on your taxes (along with your mortgage interest).
The funds are handled by an escrow agent.
If you have any questions or issues, contact your lender immediately as the payment is your responsibility.
Once you build up enough equity in your home (at least 20%) and are current on your payments you may have the option to cancel your escrow payment. If done, paying the property taxes and insurance, on time in full, is now your responsibility.
Luckily for me, I’ve paid my mortgage on time every month so I just stuffed the property tax bill in my property binder and starting writing this.
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