What is Tax Disbursement Mortgage : All You Need to Know




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Tax Disbursement Mortgage: A Guide to Understanding

Are you looking for a mortgage that takes care of your property tax payments? Look no further because the tax disbursement mortgage is here to simplify your life! In this blog post, we will guide you through everything you need to know about this unique type of mortgage.

Understanding Tax Disbursement Mortgage

A tax disbursement mortgage, also known as an escrow mortgage, is a type of mortgage that includes the payment of your property taxes. Rather than paying your taxes separately, your lender will collect a portion of your monthly mortgage payment to cover your property taxes.

This means that you won’t have to worry about making separate tax payments throughout the year. Instead, your lender will take care of it for you, ensuring that your property taxes are paid on time.

The Benefits of Tax Disbursement Mortgage

There are several advantages to choosing a tax disbursement mortgage:

  1. Convenience: With a tax disbursement mortgage, you don’t have to remember to make separate tax payments. Your mortgage lender will handle it on your behalf, giving you peace of mind.
  2. Eliminating Late Payments: By including your property taxes in your mortgage payment, you reduce the risk of forgetting to make timely payments. This helps prevent late payment penalties and potential issues with your local tax authorities.
  3. Budgeting Made Easier: Knowing exactly how much your monthly mortgage payment will be, including property taxes, allows you to budget more effectively. You won’t be surprised by unexpected tax bills during the year.

How Tax Disbursement Mortgage Works

When you obtain a tax disbursement mortgage, your lender will set up an escrow account on your behalf. This account will hold the funds to cover your property tax payments. A portion of your monthly mortgage payment will be deposited into this account.

When your property taxes are due, your lender will use the funds in the escrow account to make the payment on your behalf. This ensures that your taxes are paid on time, relieving you of the responsibility.

Understanding the Escrow Analysis

Each year, your lender will conduct an escrow analysis to adjust your monthly payment based on changes in your property taxes. This analysis takes into consideration any increases or decreases in your tax assessments.

If there is a surplus in your escrow account after the analysis, you may receive a refund. On the other hand, if there is a shortage, your lender may adjust your monthly payment to cover the shortfall.

Frequently Asked Questions For What Is Tax Disbursement Mortgage : All You Need To Know

What Is A Tax Disbursement Mortgage?

A tax disbursement mortgage is a type of loan where a portion of the monthly payment is set aside to cover property taxes and insurance expenses.

How Does A Tax Disbursement Mortgage Work?

With a tax disbursement mortgage, the lender collects a portion of the monthly payment and places it in an escrow account. This money is then used to pay property taxes and insurance when they become due.

What Are The Benefits Of A Tax Disbursement Mortgage?

A tax disbursement mortgage allows homeowners to budget for property taxes and insurance by spreading the cost over the course of the year. It eliminates the need for large lump sum payments.

Can I Choose Not To Have A Tax Disbursement Mortgage?

While it is not mandatory, having a tax disbursement mortgage provides convenience and eliminates the risk of falling behind on property taxes or insurance payments.


A tax disbursement mortgage simplifies the process of paying property taxes. With the convenience it offers, eliminating late payments, and making budgeting easier, it can be an excellent option for homeowners.

If you value convenience and want to ensure that your property taxes are taken care of without any hassle, a tax disbursement mortgage might be the right choice for you!

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