FHA and Property Tax

financialpro · Joined: 15 Jan 2009 Posts: 9

Hey All,

I have never understood this...so i am hoping someone can clarify.

I just wrapped up an FHA purchase loan for a client. I had to get the client on the phone with my processor, because I could not explain why he had to pay for 9 months of taxes in the loan.

Can someone please explain this to me? I dont get why or how it is calculated how many months someone has to pay property taxes upfront...especially with FHA because they are getting impounds so they pay tax on a monthly basis. I understand that it has something to do with the time in the tax year...someone please explain!

EricJ · Joined: 09 Jan 2009 Posts: 321 Location: New Jersey

That is a good question. I never heard of 9 months up front. The only thing I can think of is maybe the township requires 6 months up front and the bank needs 3 months escrow.

m2c · Joined: 03 Aug 2005 Posts: 937

From FP’s prior posts, I assume he’s “in the industry”. Why he/she wouldn’t understand “aggregate” analysis is an interesting question but certainly “new GFE time” will required. Perhaps his shop has already “converted” and this is an attempt to show gross before the single line seller tax proration credit. New GFE will be a whole new world and, yes, as FP points out, the brave new world will do more to confuse borrowers.

mortgagebob.com · Joined: 13 Oct 2009 Posts: 8 Location: Chicago, IL

Here is an Escrow chart for Cook County, IL and another for it's collar counties. Perhaps it will help you.

http://www.mortgagebob.com/Escrow.html

meflee · Joined: 28 Oct 2009 Posts: 5

Fha requires them to be impounded with your monthly payments along with insurance