Should You Impound Your Property Taxes? Is This Option Right For You?
Ask an Orange County realtor what is the most common thing that every homeowner has to pay and they will tell you that it’s property taxes. In California, property taxes are due twice per year; once in April and then the second time in December.
Time To Impound Your Property Taxes?
When the average consumer purchases their home they will pay their property taxes twice per year just like their friends, family members and parents did before them while others will choose to impound their property taxes.
What exactly does it mean to impound your property taxes? All this method entails is splitting up property taxes over the course of one year so the lender won’t be faced with having to pay a huge lump sum property payment in April and December.
To start choose this property tax option, a homeowner has to tell their lender that they want a portion of their house payment impounded for property taxes every month and the mortgage company will deposit the funds into a mortgage impound account and pay those taxes on the homeowner's behalf when they are due.
Is Impounding Right For You?
The impounding method has been chosen by more people over the last four years because; it enables the average homeowner to budget their property tax payment out over the course of one year instead of being faced with the “sticker shock” of having to make two big property tax payments twice a year.
In spite of it’s popularity many Orange County realtors and homeowners across Orange County still prefer the traditional way of paying their property taxes at once in April and December instead breaking up those payments over one year.
The Importance Of Budgeting
Regardless if you decide to impound your property taxes or not, make sure you budget for property taxes every month because, budgeting for property taxes will help you to be prepared to pay them when they are due.
If you plan on paying your property taxes twice a year you should at the very least open a separate savings or checking account and set aside a certain amount of money each month to pay your property taxes and avoid having to borrow money from other sources to get those taxes paid. If your property taxes go unpaid, it could result in a lien against the property and multiple headaches will arise from there.