Question: I just received a property tax bill. Do I pay it, or are my taxes and insurance included in my monthly mortgage payment?

Answer: That’s a great question. Having your taxes and insurance included in the mortgage payment, and therefore collected by your mortgage company, is called an escrow account or impound account.

The easiest way to find out if you have an escrow account or impound account is to look at the mortgage statement.

Your monthly mortgage bill usually has a breakdown of principal, interest, property tax, hazard insurance, and PMI. If you do not have an escrow account then it will just indicate principal and interest breakdown.

If you do have an escrow account, there is usually a section or box on the statement that says “escrow balance.”  This is the savings account that is built up every month by your mortgage payment’s deposit for taxes, insurance, and PMI. Some mortgage statements also have an accounting on the back of the bill indicating when taxes and insurance were paid.

If your monthly mortgage statement doesn’t show the accounting, or you haven’t received a bill at all, then you call the company that you make your payments to.

If you have a FHA or VA loan it is mandatory that your taxes and insurance be included in the monthly payment.

Please also note that in some states no matter what loan program you have an impound account is mandatory.

Questions or Comments? I’d love to hear from you.

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