I am closing on my first investment property - a 3 unit in upstate NY. Reviewing closing cost details, I'm not following why I am paying 11 months of property taxes upfront AND as a monthly escrow payment (along with homeowner's insurance).
Can someone please explain? Thanks!
Hey @Joe Cicero , is this the final closing statement? Sometimes the interim closing docs along the way aren't totally accurate and have weird things like this. Whenever you see these things and have questions, you should be calling your lender, they're the ones that will have the answers. If you're not jiving with their answer, your realtor should be able to walk you through it too and at least tell you if it's normal or not.
@Nate Burgher thanks for getting back so quickly.
No, not a final closing statement. I discussed with my broker and he confirmed that the document is subject to changes before close. I also asked for clarification on property taxes, but remain confused (hence this post). He said that property taxes need to be escrowed in the case of default, but it doesn't make sense to me to have to pay for 11 months up front and then monthly on top of that. I don't suspect that this was done in error, I just want to be sure I fully understand for future investment.
Originally posted by @Jason D. :
@Joe Cicero probably because they are due August 1st so you are paying for the 11 months that you owe for 2018-2019 and then the escrow payments are for when they're due next year.
Same principal as insurance. You pay the full year premium at closing, then immediately are paying in to escrow for the next years bill.
Got it, thanks all.
Are there any advantages to NOT escrowing property taxes in my monthly payments? In this case, I imagine I'd pay for 5 months to close and then pay for another 6-month installment at the end of January?