@tufa4311 wrote:
I've only doen this once before, had a mortgage, and guess I didn't ask these kinds of questions before. I know there is a logical reason I just don't know what it is.
Ok, so I'm confused with the amounts I am seeing on my preliminary mortgage option that I got a few months ago - I pulled out to take care of some other life issues but I'll be getting back into the market soon...
So the question I have is with propoerty taxes and how they are charged. On the itemized list for the mortgage is shows:
Mortgage: 300K
Monthly mortgage payment: $2,400
Monthly Escrow for Property Taxes: $600 of the $2,400 (25% of monthly mortgage)
Yearly Property taxes: $7200 or 2.4% of 300K
I'm confused and I know I'm missing something - maybe I'm comparing apples to oranges? How can the property tax share being put into monthly escrow be 25% of the monthly mortgage payment but, overall, the yearly property tax amount only be 2.4% of the mortgage?
Yup.
There's no direct relationship between your property taxes and your mortgage - it's just that the bank is collecting 1/12 of the property tax amount from you monthly, along with the P+I of the mortage, so that they can pay it to the tax collector on the appropriate annual or quarterly dates. (This way, the bank knows the taxes are being paid, and you can budget monthly for the taxes, instead of getting hit with quarterly/annual lump sums.)
In low-tax states/cities, you might only have an annual property tax due of a few hundred dollars... while in high-tax states, you'll see numbers like the ones you've got there. (Those are New Jersey-levels of property tax! Painful.) Either way, the bank doesn't set the rate, it just collects and disburses the money.
BTW, with those numbers, I hope that's a 20 year loan quote? (Because if that was a 30-year, it was a BAD rate.)
EQ8:850 TU8:850 EX8:850
EQ9:847 TU9:847 EX9:839
EQ5:797 TU4:807 EX2:813 - 2021-06-06
