Yes, your escrow account typically automatically pays property taxes on your behalf. This account is set up by your mortgage lender to ensure that these expenses are covered on time to avoid any penalties or issues with your property.
1. How does an escrow account work?
An escrow account is set up by your mortgage lender to collect funds from you each month to cover expenses such as property taxes and insurance. The lender then uses these funds to pay these bills on your behalf.
2. Can I choose not to have an escrow account?
In some cases, you may be able to opt out of having an escrow account, but this is usually reserved for homeowners who have a sizable down payment or meet certain other criteria set by the lender.
3. Will my escrow account cover all of my property taxes?
Your escrow account is typically set up to cover your property taxes in full, but it’s important to review your statements and escrow analysis to ensure that enough funds are being collected each month to cover these expenses.
4. What happens if there is a shortage in my escrow account?
If there is a shortage in your escrow account to cover your property taxes, your lender may either require you to make up the difference in a lump sum or adjust your monthly payment to ensure that enough funds are collected moving forward.
5. Can my property taxes increase if I have an escrow account?
Yes, if your property taxes increase, your lender may adjust your monthly escrow payment to ensure that enough funds are being collected to cover the higher amount.
6. What happens if I pay my property taxes directly instead of through my escrow account?
If you pay your property taxes directly instead of through your escrow account, your lender may consider this a breach of your mortgage agreement and could require you to set up an escrow account or face penalties.
7. Can I change the amount I pay into my escrow account each month?
Typically, you cannot change the amount you pay into your escrow account each month as this is calculated by your lender based on your property taxes and insurance premiums.
8. Can I request a refund if there is excess money in my escrow account?
If there is excess money in your escrow account, your lender may refund this amount to you or apply it towards future escrow payments, depending on their policies.
9. Do I have to pay property taxes if I have an escrow account?
Even if you have an escrow account that covers your property taxes, it’s important to remember that you are ultimately responsible for these expenses as the homeowner.
10. Will my escrow account pay other bills besides property taxes?
In addition to property taxes, your escrow account may also be used to pay for homeowners insurance and possibly other expenses related to your home.
11. Can I see a breakdown of my escrow payments?
Yes, you should receive an annual escrow analysis from your lender that breaks down how your escrow funds were used and whether any adjustments need to be made.
12. What happens if I miss a payment into my escrow account?
If you miss a payment into your escrow account, your lender may cover the expenses temporarily but could require you to make up the missed payments in the future to avoid a shortage.