How do property taxes work when refinancing?
When you refinance, your new lender typically requires a new escrow account for property taxes. The old lender will release the remaining escrow balance to you or the new lender. Your new monthly payment is recalculated based on current taxes. If you have paid taxes ahead, you may receive a refund from the old lender for the prepaid portion.
Why It Matters
Refinancing resets your tax escrow, which can affect your monthly payment. Understanding the process helps you avoid double payments or escrow shortages.
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