Tax Impounding

After I purchased my first home I wondered how tax impounding worked, more specifically how the payment of taxes work with impounds?

After a quick email to my mortgage company here’s what they said:

“Our records indicate that your monthly mortgage payment is $x, which includes the escrow payment for $x. Your county taxes and the homeowners insurance premium will be paid directly from your escrow account to the county and homeowners insurance carrier.

We will pay from your escrow account by the delinquency date. As of today’s date, your mortgage account is paid through 09/01/11.

We will retrieve your tax information electronically; therefore, you need not send us the tax bill you receive. We will pay your taxes by the delinquent date indicated on the bill. You may want to keep the bill for your records.

Per our records, your escrow account is scheduled for an annual analysis in the month of January 20xx. Your monthly mortgage payment will be adjusted effective March 20xx and you will receive an escrow overage check, if an overage exists.”

At the end of my first year they adjusted my escrow impounding but it was nice to know all of the taxes are taken care of automatically. They didn’t tell me how long the impounding will last but I imagine after sometime it becomes optional.

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