Ditching Debbie Downer: How to Evict Property Tax from Your Mortgage (and Maybe Save Some Cash)
Let's face it, nobody enjoys forking over money to Debbie Downer, especially when her name is "Property Tax" and she's shackled to your sweet mortgage payment. But fear not, weary homeowner! There might be a way to break free from this monthly money monster.
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| How To Remove Property Tax From Mortgage |
Escrow: Friend or Foe?
First, a little terminology. That pile of extra cash your lender holds onto to pay your property tax? That's called an escrow account. It's kind of like a babysitter for your tax money, making sure it doesn't get blown on that fancy avocado slicer you don't need (we've all been there).
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But is an escrow account your friend or foe? Well, that depends.
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Pros:
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- Set it and forget it: Escrow ensures your property tax gets paid on time, saving you the hassle of remembering due dates and potential late fees.
- Peace of mind: No more scrambling to come up with a big chunk of change for property tax bills.
Cons:
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- Less control: You don't get to hold onto that extra cash, which might be useful for other things (like that aforementioned avocado slicer... just kidding... mostly).
- Potential for shortage: If your escrow isn't enough to cover the exact property tax bill, you might end up owing money at the end of the year. Not exactly a party favor.
Can You Ditch Escrow Altogether?
Maybe! But before you celebrate like you just won the lottery (which would be a fantastic way to pay off property taxes, by the way), there are some things to consider:
- Loan requirements: Some lenders require escrow, especially for conventional loans with a low down payment.
- Loan-to-value ratio (LTV): This is the amount you borrowed compared to your home's value. If your LTV is high (meaning you borrowed a lot), your lender might be less likely to let you ditch escrow.
- Your track record: Consistent on-time payments and a good credit score can improve your chances of getting escrow removed.
Here's the punchline: Contact your lender and see what your options are! Be prepared to discuss your financial situation and explain why you want to remove escrow.
Important Note: Freedom Ain't Free (But Maybe It's Worth It?)
Even if you ditch escrow, you're still on the hook for that property tax, buddy. So make sure you have a plan to pay those bills on time. Here are some ideas:
- Set up automatic payments: This way, you won't accidentally forget and end up in hot water with the taxman (and trust us, you don't want to mess with him).
- Budget diligently: Factor in property tax along with your other monthly expenses. Maybe that daily latte habit can take a temporary vacation?
- Challenge your assessment (carefully): If you think your property tax is too high, you might be able to appeal it. Just do your research first!
So, there you have it! Ditching escrow might be a great way to save some money and gain some financial freedom. But remember, with freedom comes responsibility (and the occasional tax bill). Just weigh the pros and cons, talk to your lender, and make sure you have a plan to pay your property tax. After all, a little preparation can go a long way in keeping Debbie Downer at bay.
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