If you have an escrow account that covers your property taxes, contact your lender. Without an escrow account to cover this expense, you’ll need to pay the bill out of pocket, or take advantage of any payment plans available.

You opened your mailbox expecting a fun delivery or useful coupon. But instead, the mail brought you an unexpected financial inconvenience – your property tax bill. 

Property taxes are an unavoidable cost for all homeowners. But it can still be quite a surprise to receive a property tax bill in the mail. 

Once you get over the initial sticker shock, it is time to take action. 

Don’t panic: most lenders use an escrow account for property tax payments

When you close on your home loan, the lender will typically set up an escrow account. The purpose of this account is to cover property-related expenses – including your property tax bill

The escrow account is funded by a portion of your monthly mortgage payments. Every time you send in a monthly payment, your lender will set aside the appropriate amount to cover your property taxes for the year. 

By the time your property tax bill rolls around, the lender will have the funds ready to go in your escrow account. Importantly, your property tax bill can change each year. With that, your monthly mortgage payment will fluctuate to reflect the new amount. 

Read more: Why You Should Pay Attention To Property Taxes When You Buy A Home

How to find out if you have an escrow account

Most homeowners will pay their property taxes through escrow until their mortgage is paid off. But in some cases, your loan may not include an escrow account. If your lender has not set up an escrow account, then you’ll need to cover property tax bills on your own. 

If you aren’t sure whether or not your loan comes with an escrow account, you should find that information on your latest mortgage statement. But you can always contact your lender if those details are buried in the fine print. 

If you have an escrow account

If you have an escrow account that includes your property taxes, you shouldn’t have to do too much to ensure your taxes are paid, but take the following steps just to make sure: 

  • Call your loan provider. The loan servicer can provide a rundown on the steps you’ll need to take with their specific company. 
  • Send a copy of the bill. The mortgage lender may need a copy of the property tax bill. 
  • Check your escrow balance. You should be able to check your escrow account balance through your lender. If things have gone according to plan, there should be enough in this account to cover your tax bill. 
  • Check back to confirm payment. The lender should handle sending payment for your property tax bill. But it is smart to confirm that the servicer followed through on their commitment. 

The process of paying property tax bills through an escrow account is easy on the budget. Instead of dealing with a large bill once or twice a year, the lender helps you save for this big expense with every single mortgage payment. 

The escrow account could save the day by avoiding a major unexpected expense. 

If you don’t have an escrow account

It is possible that you don’t have an escrow account associated with your mortgage. Or your escrow account may not include your property taxes. You’ll receive this information at closing. But if you aren’t sure, the details should be on your latest mortgage statement. 

Additionally, homeowners without mortgages won’t have an escrow account to cover their property tax bills anymore.

Are payment plans an option for homeowners without an escrow account?

If you don’t have an escrow account, the only option is to pay the tax bill in full by the due date. But that might be easier said than done. After all, property taxes can quickly amount to thousands of dollars. 

Depending on where you live, you may have the option to pay this bill in monthly installments. However, this option will vary based on your location. 

You’ll need to check in with your local tax office to determine what payment plans are available to you. The tax office will also have information on any payment discounts available. In some cases, you might even be able to tap into a discount by paying for the entire bill ahead of the due date. 

What forms of payment are accepted?

As you decide how to save for this expense, you’ll also need to figure out the most affordable way to pay the bill. The local tax office may allow you to pay in several ways, including:

  • A check or money order via mail.
  • A credit or debit card online. 
  • A credit or debit card over the phone. 
  • An electronic payment online. 

Watch out for any fees associated with the different forms of payment. In many cases, you may have to pay a fee for the convenience of paying with a credit or debit card. That fee may be a flat dollar amount or a percentage of your bill. Either way, these fees can add up quickly!

Can you set up an escrow account after you close on your mortgage?

If staying on top of your property tax payments is not a task you want to add to your to-do list, it is possible to set one up after you close on the home. 

You can work with a bank or other financial institution to set up an escrow account. To get started, you’ll need a copy of your tax bill. Plus, you will need a copy of your insurance premium if you want the escrow account to include those payments. 

After you contact the bank, they’ll let you know how to submit copies of your bills. Additionally, you’ll likely need to sign an escrow agreement that will authorize the bank to make payments on your behalf. 

Finally, you’ll need to fund the account. Typically, the bank will require two to four months of payments ahead of time. At that point, you can make regular payments into the escrow account, and the bank will handle paying your property tax bill out of that account. 

How much will you pay in property taxes?

The amount you will pay in property taxes will vary widely based on your property and location. But all property taxes are based on the assessed value of your home. Typically, your local government will conduct these appraisals of properties in their area on a fixed schedule. You might see your assessed value change every year or less frequently. 

Most local governments offer exemptions that can further lower your tax liabilities. A few common exemptions are available for those living in the property full-time, senior citizens, and veterans. 

After any exemptions, the local government will determine your tax bill. You can find out exactly how much you owe by checking in with your local tax office. Typically, the amount you owe will be available online. But if not, here’s how to calculate it. 

How to calculate your property tax bill

  1. First things first, you’ll need to determine your property’s assessed value. The assessed value is a percentage of the home’s value that is deemed taxable. For example, let’s say the county appraises your home at $100,000. The local government taxes 80% of the value. With that, you’d pay taxes on $80,000 instead of $100,000.
  2. Next, you’ll need to find the mill levy for your location. Essentially, the mill levy is the local government’s current property tax rate. This information should be easy to find on your tax collector’s website.
  3. Finally, multiply the mill levy rate by your assessed value. For example, if your assessed value is $80,000 and the property tax rate is 1.5%, then you’ll owe $1,200 in property taxes.


A property tax bill is one of the many expenses that come with homeownership. But if an escrow account covers your property taxes, you may not have to worry about your savings taking a major hit from this expense. 

However, homeowners without a mortgage or a lender that doesn’t offer an escrow account will need to save for this significant out-of-pocket expense.

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About the author

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Sarah Sharkey is a personal finance writer covering retirement, investing, debt, savings, credit cards, mortgages, and student loans. Additionally, she is the founder of Adventurous Adulting, a personal finance blog dedicated to helping readers tackle their money and take control of the adventure of life. You can connect with her on LinkedIn or Twitter.