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Kevin Treusch Asked:

I received my commitment documents from the lender along with the final closing costs. One of the line items is 5 months of county taxes. I don't own the home yet, so how can they charge me county taxes? I live in Palm Beach County. [Fort Lauderdale FL]

12/18/2008

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Answer Provided by: James Campanella [12/19/2008]
 

That means that you are escrowing for your taxes. An escrow account is an account that the lender sets up for you where 1/12th of your total taxes and insurance (if applicable) are placed in an account each month. At the end of the year the lender pays them on your behalf. The reason why they are collectiing 5 months is to start the escrow account - you are not actually paying the taxes until next year (November). The reason why the collect so much is that if you close in January your mortgage actually will start until Feb and you will not make your first payment until March. If you were to start paying you taxes in March (1/12th) you would be short in Novemeber, therefore they collect so up front to ensure that there is 12 months worth by November of next year.