lender collecting property taxes and paying on my behalf
Jump to Page:
< Previous [ 1 ] [ 2 ] Next >
Quote:If it is held in escrow, then how is it free money to the lender?
Originally posted by 4z4z
lender takes the property tax and put it in an escrow account and then pays it whenever they like, i would assume they would pay every year.
But the point is that it is free money to lender.
-----------------------------------------------------------------
"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
If home buyer defaults on his payments (property taxes, mortgage or utilities) the property taxes take the priority over anything else. This would mean that the City can take over one's property before the bank does.
That's the reason why some lenders offer to pay the taxes on behalf of mortagor and deduct equal monthly tax payments.
By doing this they make sure that property taxes are always paid first. Thus Banks do themselves this favour.
How'z that? 
-----------------------------------------------------------------
Amit Kalia, Broker, REALTOR®
RE/MAX Real Estate Centre., Brokerage
independently owned & operated
100 City Centre Dr, Unit 1-702
Mississauga, ON L5B 2C9
Phone No.: 905-339-5111
Website: https://www.realestate-ontario.com/
Condo Blog: https://condopundit.com/blog/
Location: Canada-Glorious and Free
Posted on: 07-09-07 19:22:37
Quote:
Originally posted by pratickm
Quote:If it is held in escrow, then how is it free money to the lender?
Originally posted by 4z4z
lender takes the property tax and put it in an escrow account and then pays it whenever they like, i would assume they would pay every year.
But the point is that it is free money to lender.
Because Investpro thinks the bank can invest the money between the time you pay them and they have to pay the city. Unfortunately, escrow accounts are not handled like that. Reality is that escrow accounts are legally held in liquid state and in trust. Meaning, the bank cannot use that money to do anything. It probably costs the bank more money to handle the property taxes then the interest they make.
BV
