Why was I asked to pay 10 mos in property taxes for escrow for the appraised value at closing by my lender?
5,436Just bought a new construction home June 26th, 2018. As a part of closing I paid 10 mos of property taxes to be impounded into escrow. The amount paid was for the appraised value even for the months the house was not fully built from January to June. The builder has reimbursed their portion of the property tax in the time period on the closing statement as a deduction (of course based on the land and not the full house as it was under construction) but the lender still impounded 10 mos and will also start collecting the normal monthly amount for escrow as well starting August. I feel like I’m definitely overpaying the property tax in escrow, if calculated, I will have paid a full year of property taxes for the appraised value in my first year, even with the builder credited property tax for the land value property tax for that time period. Do I end up getting any sort of refund after the tax bill is released for the first year or did I lose a ton of money here??
Please file your homestead exemption between January 1st and April 30th, if the property you purchased is your primary residence.
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Dislike (1)Congratulations on a purchase of your new home!
Your lender will be able to better answer a question of why they collected 10 months’ worth of tax payments in your escrow account. But- the tax amount needed is estimated at the time of closing.
The lender pays property taxes on your behalf and collects enough funds in your escrow to cover taxes and homeowner’s insurance. If after the 1st of the year, if you have too much money in your escrow, the lender will refund that amount.
You may have the option to cancel your escrow payments to your lender once you have built up at least 20% equity in your home and are current on your payments but remember that you’ll then be responsible for paying property taxes and insurance in full yourself.
On a side note- please don’t forget to file your homestead exemption between January 1st and April 30th, if the property you purchased is your primary residence.
Thank you,
Yvonne Chauvin, Realtor
Better Homes and Gardens Gary Greene
281-686-0143
yvonnechauvin@yvonnechauvin.com
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