Refinancing or Purchasing in Illinois ~ Setting up your escrow account

By
Mortgage and Lending with Draper and Kramer NMLS# 189006

The 2nd installment of taxes are due for all counties in Illinois September 3, 2007.  The tax bill for Cook County is not out yet, however the tax bill for all remaining counties including DuPage, Kane, Lake, Kendal etc in Illinois have been issued and should have been received by all homeowners in May 2007. 

When refinancing a home in Illinois and escrowing your taxes during this time, it can be confusing and costly.  All taxes in Illinois are paid a year in arrears.  2007 taxes to be paid are actually for the 2006 tax year.  If you are refinancing your home now, and are establishing a new escrow account you will need to deposit at least 2 months into the new escrow account.  In addition to the 2 months established you will also need to pay the 2nd installment at closing for all counties except Cook County.  If your property is in Cook County the title company will hold a TI (tax indemnity) of at least 9 months of the prior tax bill.  This will ensure that when the Cook county bill is received enough money has been set aside to pay the new tax bill.

If you are purchasingthis time of year and escrowing for taxes the account set up is similar for Cook County.  The buyer will be required (usually) to have a TI set up for the 2nd installment of taxes.  If you are purchasing a home in any other county, the seller will (usually) pay the 2nd installment of taxes at closing because the bill is already determined. 

However, when purchasing a home you will also receive a credit from the sellers for the portion of taxes not yet due.  In other words if you are closing on your home in July, the seller will credit you for the taxes from January 07 through the date of closing in July, for the bill that will be due June and September 08. 

Setting up an escrow account can be confusing for Illinois residents.  If you need help understanding how an escrow account will work for you, I will be happy to assist.

Kim Murphy

1st Advantage Mortgage

Helping Illinois with Home Loans for over 10 years.

 

 

Comments (5)

Ray Saenz
Exit Realty Laredo - Laredo, TX
Homes for Sale in Laredo, TX - Texas, Realtor

Hey Kim, great information to share as always, Colorado is similar , but not the same, thanks for sharing that info. :P

 

Jul 20, 2007 11:19 PM
Kim Murphy
Draper and Kramer - Lombard, IL
Mortgage Loans in DuPage, Kane, Cook, Lake, Will C
Tax escrows can be really confusing when the taxes are paid 1 year in arrears!  I hope to make it a little easier to understand! Thanks Ray!
Jul 21, 2007 01:52 AM
Ray Saenz
Exit Realty Laredo - Laredo, TX
Homes for Sale in Laredo, TX - Texas, Realtor

Kim,

well you are helping people and that's very important, I am helping a lot of people who are in problems with their homes, for the arms or pay option arms programs and now that the market it is not good, they can not refi or their credit score it is not good to refi, so they are trapped, but ohh well :P

you should write something about that,  people who can not refi or sell because the home it is not worth or hey have a bad credit score.

Ray Saenz

Jul 21, 2007 07:03 PM
Cyndee Haydon
Charles Rutenberg Realty - Clearwater, FL
727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes
Kim - Good info - wasn't sure what the purchasing or refinancing was for - glad to see all the info for local homeowners - I know that will be helpful. 
Jul 22, 2007 01:09 PM
Ray Saenz
Exit Realty Laredo - Laredo, TX
Homes for Sale in Laredo, TX - Texas, Realtor

Kim,

thanks !, well, something, I hope that you later give me a full class from taxes and escrows, reserves that you need depending the month, etc

Ray :P

 

Jul 27, 2007 06:20 PM