The 2019 tax season is among us! This time of year often brings out questions about property and escrow taxes from clients and lenders. Let’s take a deeper look at how escrow helps manage tax payments throughout the year.
Timely Tax Payments – All Year Long
There are different types of escrow accounts, and the tax policies will differ with each type. One of the most pressing questions that people have is how their property taxes can be managed by an escrow account.
Escrow accounts are a common form of financial safety and protection. There are many benefits to using escrow to manage tax and insurance payments.
In real estate, your monthly payment from escrow will cover property taxes and other expenses in addition to your mortgage. This helps protect you from missing payment or other issues. Taxes and monthly premiums will change over time so don’t be surprised when your statements look different. This is normal, and your escrow payments will reflect these changes. Keep current and up-to-date with your statements to make sure there are no mistakes.
A Low-Risk System
This set-up is typically very convenient for the borrower; the taxes are already worked into the system and they avoid the risk of late or missing payments. There is, however, a trade-off. With convenience comes a lack of control on the money in escrow. While there are some instances in which lenders have calculated incorrectly, or missed tax payments on behalf of the borrower, these instances are rare and most people opt to use the lender’s service.
Bring on Tax Season
Are you ready for tax season this year? Thankfully, escrow makes staying on top of your property taxes easy and reliable. Tax season is a great time up on your payments, screen for any outliers, changes or mistakes, then rest assured that your tax payments will be made with little effort on your part.