How to Escrow Property Tax

Some mortgage loans require an escrow amount monthly to prepare for the property taxes due. Some lenders leave the escrowing into the hands of the borrower. In that case, one must be very cautious and proactive in escrowing enough to cover the property tax. The following will help in organizing and disciplining yourself when it comes to saving for that dreaded tax bill.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Property tax estimation and due date(s)
• Calculator
• Calendar
• Home Owner's Insurance amount due

1. Know the estimated property tax that will be due for the year. Remember to know the total estimated amount for both your home and land.
2. Know the home owner's insurance that's also due each year (or every six months).
3. Write down the due dates of each in a calendar.
4. Determine when you plan to escrow the amount due, be it every month, semi-monthly or weekly.
5. Determine if every payment made into your escrow will be the same amount.
6. Write down how much you plan to pay for each predetermined time period.
7. Add up all of the forecasted payments.
8. Verify this amount is equal to the property tax estimation.
9. Verify that the amount will be saved before the tax is due.
10. Adjust each payment until they add up to the tax estimation amount.
11. Send the determined escrow amount to the mortgage company or set aside to pay the taxes at the given time.

Tips & Warnings

• Property tax is just an estimation. You may have to pay more than the estimate.
• The key is to plan.