All homeowners are required to pay property taxes on their home. The amount of tax you will pay varies on the city or county where you live. You can pay your taxes of one two ways.
The most common way to pay your property taxes is as a part of your monthly mortgage payment, often referred to as your PITI.
The T in PITI stands for your property taxes.
In this scenario, your lender collects approximately one-twelfth of your taxes each month as part of your mortgage payment in an escrow account (effectively a savings account). They then pay your taxes for you. Don’t be alarmed if you still receive a tax bill – DON’T PAY IT! Just alert your lender that you received it. Most lenders actually require this option unless you have paid down your loan to a certain amount. Most buyers also prefer to pay their taxes this way as well. If your yearly tax bill is $12,000, you would be paying $1,000 per month instead of two $6,000 payments.
The other alternative is to remove the T from your PITI and not have a lender escrow account. You would then just make your tax payments twice yearly when you receive the tax bill.
The good news is when you calculate your mortgage payment, it already takes into account your property tax bill, so it is not an additional charge. If you decide not to do an escrow, your mortgage payment would then be lowered by that amount.
Question on this process? Contact us! We are always happy to help.