Profile picture for luvmycondo10

Do I save more money for paying monthly Property Tax to the lender or pay directly to the County?

  • June 13 2010 - Orange
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Answers (6)

Profile picture for Ofe Polack
I think this is a matter of preference and management skills.  In some counties the taxes are paid quartely in most twice a year.  The interest gain if you have the money in your own account is minimal.  As I said, totally a matter of financial management preference.
  • June 14 2010
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the interest savings by paying it yourself (and thus keeping the money in your own interest bearing account) are not significant, unless you own multi-million dollars of property.
Here in AZ, property tax is paid twice a year, and the penalty is a 15% rate charged on anything you don't pay on time, so if you choose to pay yourself, be darn sure to pay it on time!
  • June 14 2010
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Profile picture for ABBAUSA
Many people get into trouble for not keeping their real estate property taxes current.

Years ago when I was a heavy investor in land and property is was convenient not to pay or keep current, because there was not much of a penalty. I was buying and closing regular and I would just have the title company make things current at closing.

That is bygone days.....the penalty is steep now if not paid in full by the last business day in January.

Pay on time and make sure you don't incur the late penalty fee,

Good Luck!

James Callas - Realtor®
  • June 14 2010
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I always recommend impound because life can be pretty cruel sometimes. If it is paid in monthly increments, the hit seems less than if you pay in one large chunk. Being that it isn't that large of a payment when broken down and in one or two lump sums can make one think of much better ways of spending it. Especially if an emergency should come up. Got to remember, depending unless your county is different from most, your property taxes can be delinquent up to 5 years before the tax man forecloses on you, that is unless you have special assessments which are accelerated and enables the county to foreclose on you in 90-days of not being paid. Now wouldn't that be sad if you are the one who pays the bills and you are taken out leaving a loved one left to pay the bills. They may know to make the house payment but unknowingly miss the property taxes. Can you feel the pain and sadness this may cause to delay a bill that will have to be paid anyhow?

Your choice, I recommend impound myself... What do you stand to gain by delaying it? Plus it gives your loved ones the ability to grieve without the surprise of big brother giving a double whammy

  • June 14 2010
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I'm not sure how much money you'll make when banks are hardly paying much interest but given the choice I recommend paying the taxes yourself - assuming you can put aside a portion every month so you have it when tax time comes.

Two things to consider - some lenders charge a .25% loan fee to waive an impound account. I'd still pay them yourself but realize you may pay a few hundred dollars right up front just for the privilege - wiping out most of any interest you may earn.

Second item - I like paying your own tax because if the lender ever screws up your tax payments guess who's fault it is? Yep - yours. I've seen banks collect too little from you and then add $150 per month to close the shortage.  The lender will never make a mistake on your regular principal and interest payment - that's all automated. The property taxes and home owners insurance cost change from time to time so there's a manual human element involved and sometimes mistakes happen.
  • June 13 2010
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Profile picture for wetdawgs
If you have that option, and you have good money management skills, you can earn more with the money you are saving for the property taxes personally vs having it in escrow.  If you have lousy money management skills and don't have enough at tax time, then you are in big trouble!

  • June 13 2010
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