This is a good question: Did you or your bank plan to escrow (i.e., set aside) money for annual property taxes and homeowners insurance?
3-2-2015: Here’s an interesting story why you must pay attention you are responsible to pay your property taxes – Woman loses half of her house to neighbor
Short answer: Since your lender can lose their investment in your property (i.e., what they loaned you to purchase the home), which is not covered by other types of insurance such as title or mortgage insurance, through a property tax sale or if property is destroyed without insurance coverage, they normally require the collection of these escrows to make those two annual payments.
If you don’t pay your homeowner’s insurance, then the lender is authorized by you through the mortgage application and security (i.e., mortgage) deed to acquire insurance for you (usually at 3-10 times the cost of normal homeowner’s insurance), and then require you to pay for it.
If you or your lender don’t pay your property taxes, someone else might. And according to your state’s laws governing property tax sales, you may lose your home. For example, under current law in Georgia, the person who pays the property taxes after the property owner becomes delinquent must wait 12 months for a right of redemption by property owner to pay the back plus up to 20% interest/penalty.
Note to self: Don’t let your homeowner’s insurance or your property taxes go unpaid. If you have elderly family members who pay their own taxes, make sure they pay them. It’s a terrible way to lose their home.
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