Paying Property Taxes Directly?

PennyPincher · #1 (**permalink**) 07-29-2005, 07:50 AM

I've seen in other forums lately that some of you have saved money by paying your property taxes directly, instead of with your mortgage into an Escrow.

Can someone guide me as to how to get that set up? Do I call my mortgage company, contact the city, or something else?

(Sorry to sound dumb here, but I'm a relatively new homeowner.)

Thanks!

mjrube94 · #2 (**permalink**) 07-29-2005, 08:11 AM

I'm one of the people who now pay my property taxes directly and it's been great! Here's how I went about it:

First, call your mortgage company, and ask them if they will allow you to forego escrow and pay directly. I believe most lenders have a set of criteria which you must meet in order to do this (e.g., you must have at least 20% equity, a history of on-time payments, a conventional loan, etc.). Even if you think you may not be able to, call anyway to make sure. Also, ask them if they charge a fee for shutting down your escrow account. (Mine is through Washington Mutual and they didn't, but I've heard of others that do).

If you are permitted to pay directly, they will send you out some forms to sign, and will send you a check for whatever amount is in your escrow account. (They say this could take up to 60 days, though mine was done in about 3 weeks).

Then call your town to let them know you will be paying directly and to send the bills directly to you. Keep in mind property taxes are normally due Feb 1, May 1, Aug 1, and Nov 1, just in case they forget to bill you directly you can follow up.

Then call your insurance company and let them know that you will be paying directly as well.

That's it. Be careful of the timing of all of this. If you are coming up on a date where taxes or insurance is due, you may want to hold off until that payment is made, just so there is no chance of it falling through the cracks. Also, you may want to consider using a separate account that you fund each month, that you pay the taxes out of, so you're not tempted to spend it out of your regular checking account.

If you add up your property taxes and insurance and divide by 12, and add that to your monthly mortgage payment (just the principle piece) you may find like I did that your mortgage company is taking out $50 or more per month extra (completely legal - they're allowed a buffer by law). When you add that to whatever is already in your escrow account, you could be looking at a nice little chunk of change...

Good luck!

mom-from-missouri · #3 (**permalink**) 07-29-2005, 06:30 PM

beware--a friend of mine just got a notice in the mail from his homeowners insurace "inviting" him back to their company. Come to find out, his mortgage company was taking his money for his homeowners insurance AND real estate taxes, but had paid NEITHER one. They claim it was a computer glich. Anyhow, he now has his attorney involved, the mortage company has to pay all the taxes, including the fees (lucky he didn't get auctioned off at the court house-was 2 years in arrears), and what was supposed to be going to the insurance company, will be applied to his principal now. He has a large farming operation, often hires help. What if something would have happened?? He has had no insurance for 2 years!! Seems the insurance company sent the cancellation notice to the mortage company, not him, so he never knew till this past week.

DivaJen · #4 (**permalink**) 07-29-2005, 09:20 PM

Quote:

Originally Posted by mjrube94

Keep in mind property taxes are normally due Feb 1, May 1, Aug 1, and Nov 1, just in case they forget to bill you directly you can follow up.

We have always paid our property taxes directly, and I'm glad that we do. That's thousands of dollars that we're earning interest on each year.

One thing - here property taxes are due 12/10 and 4/10, so dates taxes are due apparently vary.

34saving · #5 (**permalink**) 07-29-2005, 09:26 PM

MN sends a statement at the beginning of the year and expects you to remember in May and October. I have mine on auto-withdrawl because I just don't trust myself!

cicy33 · #6 (**permalink**) 08-01-2005, 06:30 AM

Ours are due July and August for one house and Sept and Oct for our other house. Not sure why it is different, but I stopped asking government questions years ago!

zakity · #7 (**permalink**) 08-02-2005, 10:25 AM

If you have a VA loan, you can't do this yourself. We have a VA loan and it isn't allowed. It would be nice to be able to.

PennyPincher · #8 (**permalink**) 12-07-2005, 10:53 AM

Thank you for all the tips here. I finally called my mortgage company to request the escrow waiver form, etc. However, I was told that there would be a waiver fee. Has anyone else encountered this???

I am so annoyed that I am asking them to do LESS (not pay my taxes), but they want to CHARGE me. I guess they enjoy getting the extra interest from all their clients. UGH. They couldn't tell me what the fee would be because it "varies from loan to loan". I'll find out when I get my paperwork.

By the way, my lender is Suntrust Mortgage...

mjrube94 · #9 (**permalink**) 12-07-2005, 11:42 AM

How good is your mortgage rate? Shop around and see what it would cost you to refinance. Then tell Suntrust that if they charge you the fee you'll refinance through someone else and they'll lose your loan. (Best case - they don't charge the fee. Worst case - they still charge you the fee, then it's up to you if you switch or not).

PennyPincher · #10 (**permalink**) 12-07-2005, 12:36 PM

I have an ARM, so right now I'm at about 4.25%...and will be for another year. I'll be curious to see what the fee is. I feel like they've been making out pretty well on this setup for the last 2 years!

PennyPincher · #11 (**permalink**) 03-03-2006, 06:45 AM

ARGGHHHH. I am so frustrated. I was hoping to remove my excrow account, but it will cost me 0.25% of my principal loan balance, to the tune of $367.14!!! Apparently, when I closed on the home, I receive a .25% discount for agreeing to have an escrow account. (I don't recall.) Anyhow...they said I need to pay it to remove it. Guess I'll leave things as is om this property...

The good news...on my other loan for my primary home...they will delete it with no fee.

This is with BB&T. I may just re-finance my other loan with them. I have no idea what that could cost though... ugh.

Ima saver · #12 (**permalink**) 03-03-2006, 06:50 AM

I have always paid my taxes directly since I have no mortgage. Ours are due on Dec. 20th, 5days before christmas. Whose idea was that?

frugalfarmwife · #13 (**permalink**) 03-03-2006, 09:15 PM

Quote:

Originally Posted by Ima saver

I have always paid my taxes directly since I have no mortgage. Ours are due on Dec. 20th, 5days before christmas. Whose idea was that?

A government Christmas present huh?

I've always paid our myself also, we owned our first farm outright. Ours are due in late Feb and late Aug.

kj