Escrowing for property taxes with mortgage financing is a crucial aspect of managing real estate transactions. When you escrow for property taxes, it means that a portion of your mortgage payment is set aside in an escrow account to cover your annual property tax bill. This ensures that you have the necessary funds available when the tax bill comes due.

Here’s how it works:

1. Escrow Account Setup: When you obtain a mortgage loan, your lender may require you to set up an escrow account. This account is separate from your regular mortgage payment and is used exclusively for property taxes and insurance.
2. Monthly Escrow Payments: Each month, a portion of your mortgage payment is allocated to the escrow account. This amount is based on the estimated annual property tax bill divided by 12. The lender holds these funds until the tax payment is due.
3. Property Tax Payment: When your property tax bill arrives, the lender pays it directly from the escrow account. This ensures that you don’t miss any payments and that the property taxes are paid on time.
4. Adjustments: Occasionally, the escrow account may need adjustments. If the actual property tax amount differs from the estimated amount, the lender will adjust your monthly escrow payment accordingly.
5. Transparency: You’ll receive an annual statement detailing the activity in your escrow account. This includes the property tax payments made on your behalf.

Escrowing for property taxes provides peace of mind, as it ensures that your taxes are paid promptly without any effort on your part.