12 Mar 2011

Are you confused about Tax Impounds?

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When purchasing a home, tax impounds can be very confusing.
The amount to be collected will change daily. Each month there will be a different amount of months of required estimated taxes to be deposited into escrow and held in your impound account which is set up by your lender for when the taxes become due by the County. See the chart below.

Closing/Funding MonthFirst Payment MonthImpounds Required
JanuaryMarch6 Months
FebruaryApril1 Month
MarchMay2 Months
AprilJune3 Months
MayJuly4 Months
JuneAugust5 Months
JulySeptember6 Months
AugustOctober7 Months
SeptemberNovember8 Months
OctoberDecember9 Months
NovemberJanuary4 Months
DecemberFebruary5 Months

1st Half Taxes Due November 1st – Delinquent December 10th
2nd Half Taxes Due February 1st – Delinquent April 10th

  • The amount a new lender will require to establish your tax impound account will vary according to when you close your real estate transaction.
  • Keep in mind these are not fees, tax impound account set-up costs are your money.
  • If you would like to discuss paying tax impounds, please talk to your loan officer.

* This tax impound chart is intended for general information purposes only. No guarantee for it’s accuracy.

What this means to a Buyer is that certain months, there will be more up front money required than other months for your tax impounds.. After looking at the chart, you will see that if you close escrow in October, your first payment most likely will be due in December where there are 9 months of taxes to be collected from you up front for your impound account. In the past years of selling homes, I have found that if you are using Conventional financing, it’s possible that you will not be required to set up an impound account for taxes and homeowner’s insurance in order to close escrow. If that is allowed, you can close escrow without an impound account, then set up an impound account later when there is not as much money required. Many Buyers will choose to have an impound account for taxes and insurance so they will not have to come up with a lot of money when the bills become due. Real estate taxes are due twice per year and homeowner’s insurance is due once per year. I hope you find this Tax Impound information helpful.

About the Author

I have been a Realtor for over 25+ years helping folks find their dream home.

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