This is the time of year when the 1st installment of property taxes are due. Their due date is November 1st and their “late” date December 10th. If you’re like me, you want to hang on to your money as long as possible, so a lot of people wait until close to the late date to pay their taxes. If you’re closing around this time, and especially on or after 11/1, the lender will require that you pay them. After all, they are due.
It is in September that I start giving my clients a “heads up” to be prepared for this. We all plan differently and our debt management can be very fine. Generally, here are your options, but some may depend on when you expect to close and when you naturally pay your taxes to the county:
1. You can cut a check for them in escrow.
2. Value-permitting, you can roll them into the loan amount so that you don’t have to pay them out of pocket.
3. You can pay them online to the county via credit card (I think there’s a small charge for this), but PRINT the receipt and keep a copy!
The main concern is that the escrow officer/title company is able to verify that they have been paid. The worst situation for you to be in is if you write a check and mail it off to the county. It’s somewhere in the system, but perhaps it takes the county a few weeks to register it in the system. If you need to close between now and that time, and since the escrow officer is unable to verify they’ve been paid, you will have to cut another check for the taxes. You will end up being reimbursed at some point down the line, but we’re talking about a bureaucracy here, and everything bureaucratic takes a long time. And that also means you have to assure you have the money for both payments in your checking account.
Just a heads up! Talk to your lender/broker about the timing and strategies.
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