The Bill That Shows Up in the Mail and Causes Unnecessary Panic Every Year

If you are a homeowner in the southeast property tax bill season is here and that means a lot of homeowners are opening their mailboxes and seeing a number that looks alarming. Kendra LaManna at New American Funding wants to give you a quick heads up before that bill arrives so you know exactly what to do with it.

The Short Answer: Do Not Panic

If you pay your property taxes through your mortgage escrow account you do not need to write a check for that bill. Your mortgage servicer is already collecting a portion of your estimated annual tax obligation every month as part of your regular mortgage payment. When the tax bill comes due your servicer handles the payment directly from the escrow account on your behalf.

The bill showing up in your mailbox is informational. It is not a demand for payment from you personally as long as your taxes are escrowed through your mortgage. Hold onto it but do not write a check to the tax authority directly.

What to Actually Pay Attention To

Here is where Kendra's advice goes beyond the basics. Watch your monthly mortgage payment closely because the property tax bill season often coincides with or triggers an escrow review by your servicer.

If your actual tax bill came in higher than what your servicer was collecting for you may have an escrow shortage. That shortage typically gets spread across your next twelve monthly payments as a slightly higher payment amount until the account is balanced again.

If your actual tax bill came in lower than projected you may have an escrow surplus. In that case you might receive a refund check from your servicer or see a reduction in your monthly escrow contribution going forward. Small wins as Kendra puts it but real money worth paying attention to.

What to Do With the Escrow Statement

When you receive an escrow analysis statement from your mortgage servicer do not throw it to the side. This document explains exactly how your escrow account is performing, what your servicer expects to pay out in taxes and insurance over the coming year, and what your adjusted monthly payment will be if a change is needed. It is one of the most useful pieces of mail a homeowner receives and one of the most commonly ignored.

If you read it and have no idea what it means that is completely fine. Reach out to your current mortgage servicer for an explanation or contact Kendra LaManna directly. She is happy to walk through it with you and help you understand what the numbers mean for your monthly budget.

NMLS 1496814. Call or text 585-329-1491 or email [email protected].

Sources

ConsumerFinancialProtectionBureau.gov
FannieMae.com
MortgageNewsDaily.com
Investopedia.com
HUD.gov