Here’s what soon-to-be homeowners should know about their property taxes. Instead of paying them directly to the government, you pay your mortgage company.
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How exactly do property taxes affect your monthly mortgage payment? Most lenders require that they pay your taxes by placing some of your closing cost money in an escrow account. This ensures that the government won’t place a lien on the property before the mortgage company does.
“Once the lender calculates your tax bill, they divide it by 12 and add it to your monthly payment”
Via an estimate from the county, your lender will figure out what your tax estimate is. Taxes are due April 15, but here in Colorado, property taxes are paid in arrears, meaning that your taxes don’t have to be paid in their entirety by April 15. Specifically, the state allows you to pay the first half of what you owe in taxes in February, and the second half in June.
Many mortgage companies prefer this method because it allows them to hold on to your money and keep the interest. Once the lender calculates your tax bill, they divide it by 12 and add it to your monthly payment, splitting it up nicely over the year.
If you’re using an online mortgage calculator, make sure you’re including taxes and homeowner’s insurance because those will most certainly affect your monthly payment.
If you have more questions about this topic, or you’re ready to start looking at homes, feel free to reach out to me via phone or email. You can also check out the latest Pike’s Peak area homes by following the links below.
