Question about paying taxes at closing...

If you gave money at closing for taxes does that mean that your taxes are then paid OR is that held in escrow and you are still billed for your taxes just they way you would be normally? If that makes sense.

Re: Question about paying taxes at closing...

It depends.

Sometimes you are paying the sellers back for the taxes that they pre-paid for the quarter (in this case - hypothetically) it would be the fourth quarter taxes.

Then, you are done for the "year of 07" and then in your next mortgage payment you will be paying your taxes for 2008 - Not sure how it is in NY, but in NJ we pay every quarter so they keep on charging us our taxes every month and it goes into escrow until they pay.

My old mortgage company told me that if we didn't have enough they would pay it and then we would catch up.

Re: Question about paying taxes at closing...

It depends. If you paid taxes at closing there are three possible scenarios:

1. You paid the seller's back a per diem share of the taxes from the date of closing till the end of the tax period. At the same time the seller's could be paying you a per diem share for the time they lived there (in nassau if you closed today the seller would owe you per diem school taxes from july 1, 2007 through the day before the closing)

2. Your taxes will be due before your first mortgage payment and the bank requires that you pay the taxes for the upcoming period. In this case the title company will collect the taxes due for hte next period and hold them in escrow until the bills come out. You may still get a bill from the town but the title company will be checking also to see if the bills came out and will pay the bill for you. (in suffolk the taxes are due in december so if you closed today the title company would collect taxes for that period--because the new bills aren't out they would collect 20% more then the current bill and hold it in escrow until the bills come out--when they do they will pay the bill and reimburse you if they collected too much.

3. Your taxes being escrowed by the bank. If this is the case the above two might apply also. In this case the title company will collect a few months worth of taxes & insurance to hold in their escrow account so that when the bills come out they can pay your taxes for you.

In some instances all three of these apply. the first one always applies unless you close on the day of the tax period. instance 2 will only happen in some cases depending on when you close.

I hope this helps--good luck

Re: Question about paying taxes at closing...

BUMP

Re: Question about paying taxes at closing...

It 100% depends on when you close, when the taxes are due, etc.. When I closed, I escrowed for like 8 months of taxes, so I do not have to worry about it and my bank will pay.

Did you get a GFE??? It will say it on there how many months you have to escrow and that will give you an idea.

Re: Question about paying taxes at closing...

When we closed, we paid for 1 year of taxes, plus reimbursed 1 month of taxes to the previous homeowner. The tax needs ot be paid in full. Then, every month, our mortgage payment includes tax, and that money goes into escrow for next years tax payment.

Re: Question about paying taxes at closing...

The taxes you pay at closing go to both reimburse the seller - since taxes are paid in a lump sum at a point during the year - and escrow (if you choose to have the bank pay your taxes).

Each month, along with your mortgage payment, you will be paying an estimated 1/12th of your taxes, which will be put into escrow for when taxes are due next.

If you choose to escrow, you won't receive a tax bill, just a notice of payment.

We decided it would be better for us to hold our own money and pay our taxes on our own. It cut down at the amount we needed at closing significantly and we've been earning interest on the money instead (although we did have to pay a fee to waive escrow).

Re: Question about paying taxes at closing...