As I mentioned during last week’s regular paying the bills, our property tax bill was coming due. We pay our property taxes and homeowner insurance ourselves, rather than allowing the mortage company to collect it in escrow throughout the year. We did this for several reasons. First, the mortage company seemed to have difficulty paying the homeowner insurance on a timely basis. We would get letters from the insurance company that it had not been paid. Second, the mortage company would not calculate the escrow amounts correctly and would always estimate on the “high” end. When we refinanced the mortage a few years ago, we set it up so that the mortgage company would not collect the escrows.
Now several of the lenders we were considering did not want to do this. After all, collecting escrow money amounts to a lot of money for the mortgage business and some just were not willing. So, we found a lender who would give us a very low rate and at the same time would allow us to pay our own property taxes and insurance.
We estimate the property taxes and insurance and come up with a total dollar amount. We divide that amount by 12 to figure a monthly dollar amount that we need to set aside, taking into account when the bills will actually come due. For us, that is the end of November and the end of December, respectively. If we pay our property taxes by November 30, we pay the lowest amount in taxes. The amount increases incrementally per month after that.
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