Just got 2 supplemental property tax bills for a house I purchased earlier this year in CA.
Anyone know if lenders typically allow the use of the money from an impound/escrow account to pay for these or on my behalf? Based on my calculations, the balance is large enough to more than cover all the bills (including the normal annual property taxes & insurance), but I'm guessing the lender might require a minimum balance to remain in the escrow account.
I also understand that they don't receive these supplemental tax notices and don't include them in their calculations for the monthly escrow amount.
I'll be contacting my lender tomorrow, but was hoping to get a quick answer to ease my mind before then haha.
Lender · Boca Raton, FL · Member since 2017 · 35 posts · 15 votes
3y
Your Loan Servicer should be receiving these tax bills as well and should pay these for you out of escrow. Depending on how much you have in escrow it should cover the entire payment. You’ll definitely want to give them a call to be sure they received the bills.
Most lenders will have a reserve requirement totaling 2-3 months of taxes/insurance payments.
Lenders typically underwrite and assign escrow based on previous owners taxes. Once properties change ownership taxes usually adjust based on purchase price. Make sure you dont have any shortages in escrow for the adjustments made for 2023 taxes.
Servicer will not have enough money in the reserve balance to pay the increase in most situations.
Property taxes might have been assessed on old value ten years ago. CA house value $900000 today $5625 is due in December and old amount will be drastically lower. Lender should have told you this was coming. The title report showed the old tax amount and 1.25 times the new sale price is the jump. The lender set up impound on old lower amount.
Servicer can increase your payment for three months to catch up to have enough in there to also pay in the spring. Expect the jump. There always has to be enough in ADVANCE to pay the coming bills.
Your Loan Servicer should be receiving these tax bills as well and should pay these for you out of escrow. Depending on how much you have in escrow it should cover the entire payment. You’ll definitely want to give them a call to be sure they received the bills.
Most lenders will have a reserve requirement totaling 2-3 months of taxes/insurance payments.
Lenders typically underwrite and assign escrow based on previous owners taxes. Once properties change ownership taxes usually adjust based on purchase price. Make sure you dont have any shortages in escrow for the adjustments made for 2023 taxes.
Servicer will not have enough money in the reserve balance to pay the increase in most situations.
Property taxes might have been assessed on old value ten years ago. CA house value $900000 today $5625 is due in December and old amount will be drastically lower. Lender should have told you this was coming. The title report showed the old tax amount and 1.25 times the new sale price is the jump. The lender set up impound on old lower amount.
Servicer can increase your payment for three months to catch up to have enough in there to also pay in the spring. Expect the jump. There always has to be enough in ADVANCE to pay the coming bills.
Spoke with the mortgage company and notified them that I received the 2 supplemental tax bills. Confirmed that they would be able to pay both amounts using the money in the escrow account.
Appreciate the help, thank you again for your thoughtful responses!
Scottsdale, AZ · Member since 2019 · 434 posts · 248 votes
3y
Will - The CA property tax system is a mess the first 1 yr of home ownership. That is great they are paying them for you, but be prepared to get an escrow re analysis in the coming months from your lender as they may need to collect some more money to get their escrow account back on track. After the first year juggling act is over and your taxes are reassessed, it will be much more dialed in.
Will - The CA property tax system is a mess the first 1 yr of home ownership. That is great they are paying them for you, but be prepared to get an escrow re analysis in the coming months from your lender as they may need to collect some more money to get their escrow account back on track. After the first year juggling act is over and your taxes are reassessed, it will be much more dialed in.
Oops, sorry I must have missed this! Thanks so much for the info, Zach! Agreed, CA property tax system is definitely a mess amongst many other things haha. Hopefully no more tax surprises and smooth sailing from here on out.