Do I need to pay upfront taxes in Maryland to the settlement company

siow_a · Joined: 11 Feb 2009 Posts: 1 1.41 Dollars($)

We have a credit of $2200 on our current escrow account with our 1st any only mortgage.

We are currently including our county taxes in our mortgage payment which is deposited into an escrow account. The balance is now $2200.00.
The total county tax to be paid in Sept & Dec 2009 will be ~$6000. We are about to close on a refinancing deal for this home(our primary resident). The settle company wants the $6000 less 2200(escrowed) paid in full at closing. Why do we need to pay this amount if the tax is not due until the end of the year. They claim Montgomery county in Maryland require Taxes paid in full in order to get a stamp.

Should I pay this upfront tax? Should I look for a different settlement company?

Also Our lender want us to pay the P/I for the whole month when we are closing in the middle of Feb. Is this allowable?

Posted: Fri Feb 13, 2009 4:20 am Post subject:

You can check with another settlement company so that you can be sure whether they are telling you the right thing. You can also contact a tax advisor who may guide you in sorting out the issue.

ashleyblanton · Posted: Fri Feb 13, 2009 2:53 pm Post subject:

Siow,

Couple things.

1. If your taxes are not due til the fall, then NO, you are not required by the escrow company to pay them. The lender may want you to pay them as one of their guidelines, but your tax bill isn't even out yet, so your escrow company will not even know how much to pay, let alone hold your funds that long. I would look into a different escrow company.

2. They want you to pay P/I for the whole month? Not quite sure what you mean. Whatever day your loan funds, they take this day and until the 1st of the following month will be the interest you pay through the closing of the loan. Are they saying you owe interest for the whole month?

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