Your Residential Mortgage Application: Considering Taxes

If you are completing a residential mortgage application, you need to spend some time thinking about the tax implications of your home purchase. When you own a home, you will have to pay real estate taxes to your county. The taxes will be based on the value of your property. The tax assessor will multiply the property value by a specific county rate in order to determine your tax rate.

How to Pay

You will have several options to consider when you pay your taxes. You can pay the taxes in a lump sum every year. You can also set up an escrow account with your mortgage lender. You will make a slightly larger mortgage payment every month and the mortgage company will put the extra into an escrow account. Then, once a year, the mortgage company will take the money out of the escrow account and use it to pay your real estate taxes. 

In most cases, it will be easier to set up the escrow option with your mortgage lender. This way, you do not have to worry about saving money throughout the year in order to pay your real estate taxes. The account is called an escrow impound account and taxes and insurance are usually collected together.