Escrow isn’t a requirement. The only requirement is that you pay your taxes and insurance whether you have someone else doing it or do it yourself.
What varies from place to place is how property taxes are calculated. Many places “lock you in” to a rate when you buy and only reassess when the property changes hands. In my state, the rate just increases by 3% every year regardless of whether you sell or not so nobody is hit with a big surprise bill.
Some places cap property tax increases per year, or even have a flat rate based on purchase price (or appraisal?) that never goes up… until you sell the house to someone new. Then the tax gets recalculated based on the current value of the house. So if the price of the house went up 10x in those 30 years, the tax is going to be 10x higher. It’s actually beneficial to the taxpayer IMO to have a consistent predictable tax that doesn’t go up over time if your neighborhood gets gentrified or whatever and home prices skyrocket.
The bank usually pays taxes and Insurance from the escrow account. You pay into escrow every month. If insurance goes up, so does the amount you pay into escrow
That is only if your mortgage was written that way. I don’t know if mortgages are “usually” written that way, but only my first mortgage had an escrow account.
This doesn’t make sense to me.
In my state the bank pays the property taxes. Its included in the monthly mortgage and goes into an escrow account for taxes.
I guess the rules vary by state.
Escrow isn’t a requirement. The only requirement is that you pay your taxes and insurance whether you have someone else doing it or do it yourself.
What varies from place to place is how property taxes are calculated. Many places “lock you in” to a rate when you buy and only reassess when the property changes hands. In my state, the rate just increases by 3% every year regardless of whether you sell or not so nobody is hit with a big surprise bill.
Some places cap property tax increases per year, or even have a flat rate based on purchase price (or appraisal?) that never goes up… until you sell the house to someone new. Then the tax gets recalculated based on the current value of the house. So if the price of the house went up 10x in those 30 years, the tax is going to be 10x higher. It’s actually beneficial to the taxpayer IMO to have a consistent predictable tax that doesn’t go up over time if your neighborhood gets gentrified or whatever and home prices skyrocket.
That part makes more sense. In my state the tax on the house goes up. It’s not locked like that.
I feel like it’s an oversight to not calculate the new tax rate and include it as cost to the buyer.
The bank losses out on the loan if you foreclose on it. They make money on the interest not the sale.
The only one who makes out on a bad sale like that is the realtor.
The bank usually pays taxes and Insurance from the escrow account. You pay into escrow every month. If insurance goes up, so does the amount you pay into escrow
That is only if your mortgage was written that way. I don’t know if mortgages are “usually” written that way, but only my first mortgage had an escrow account.