Home shopping can be fun but when you think the time is now to invest in a property, you are leaping into a major financial commitment. Prior to your home purchase, you are actually entitled to pay off several expenses aside from the purchase price. And property taxes are included in your home acquisition repertoire. You have to do a little research whenever you do your home shopping. It is like canvassing products and equipment before riding the purchase bandwagon.
Property taxes can make any home shopper groan. Home buyers certainly do not like handling property taxes and the processes that it entails which is something they are likely have to deal with beforehand. Multitudes of home shoppers that have mortgage loans set up accounts whenever they close on a home purchase. From this account, property taxes are paid as well as insurance premiums. In some cases, many homeowners may want to take out the property taxes from this account and directly pay the taxes.
However, this can be difficult, that is why having an account for your property tax is much advisable.
Say, for instance, that you are shopping for a home. But reality and questions set in who will be responsible for paying the property tax at some point in the first quarter of your home acquisition. Usually, property taxes are classified as pro-rated meaning that sellers are responsible for paying the taxes until the closing date. From that date on, you will be held accountable for the property tax payments as home buyer.
So what is this account for property tax when home shopping? If you have a loan officer, he or she will provide you good faith estimates which reveal just how much you will be depositing into an Escrow account for property tax payments in the future. This account also includes putting in your homeowners insurance.
What will happen next is, you have to send payment for your property tax every month by using the Escrow account. Basically, property taxes are due annually so your account will hold your property tax payments every month until the time they are due. Note that the account for property tax does not create an interest for banks as it is merely a holding account that is useful and convenient for your expenses. If you have applied for loans when home shopping, the bank or loan company will pay the taxes for you at the time they are already due.
An Escrow account is basically a special savings trust account with the name of the borrower to pay the property taxes. You can deposit your savings in a bank or financial institution which are held and segregated for specific purposes such as your property tax. Indeed, having this type of account comes in handy whenever you are going home shopping. Escrow accounts enable you to purchase the home you want as you are confident you have adequate funds to finance property taxes and insurance pay offs.
However, do not be lenient when it comes to having this type of account for property tax whenever you go home shopping. You need to pay sufficient money to cover anticipated property taxes, insurance, and other estimated taxes. The money should be fairly paid into the account. Furthermore, when home shopping, keep in mind that you must be current in your loan payments to acquire your ideal home and pay off property taxes.