Resources - Taxes

Most mortgage lenders require that borrowers provide reserve funds or escrow accounts to pay future real estate taxes and insurance premiums. A borrower starts the account at closing by depositing funds to cover at least the amount of unpaid real estate taxes. The buyer receives a credit from the seller at closing for any unpaid taxes. Afterward, an amount equal to one month’s portion of the estimated taxes is included in the borrower’s monthly mortgage payment. The borrower is responsible for maintaining adequate fire or hazard insurance as a condition of the mortgage loan.