Yes, you can pay your own property taxes and homeowners insurance when purchasing a home in Phoenix, Arizona, but there are some things to consider:
Escrow Accounts:
- What they are: Lenders often require an escrow account, especially if you put down less than 20% on your home. This is an account where they collect a portion of your property taxes and homeowners insurance each month along with your mortgage payment. They then pay these bills on your behalf when they are due.
- Why lenders like them: Escrow accounts protect the lender by ensuring that your property taxes and insurance are paid on time. If these aren’t paid, it could lead to liens on the property or lapse in coverage, which puts the lender at risk.
Waiving Escrow:
- Is it possible? In some cases, you may be able to waive the escrow requirement, especially with a larger down payment (typically 20% or more) and good credit.
- What it means: If you waive escrow, you’ll be responsible for paying your property taxes and homeowners insurance directly. This means budgeting for these expenses and making sure you pay them on time to avoid penalties or lapse in coverage.
Things to consider:
- Budgeting: Paying these expenses yourself requires careful budgeting to ensure you have the funds when they are due. Property taxes in Arizona are typically paid semi-annually, and homeowners insurance is usually paid annually or semi-annually.
- Responsibility: You’ll be responsible for keeping track of due dates and making timely payments.
- Lender requirements: Even if you prefer to pay these expenses yourself, your lender may still require an escrow account depending on your loan type, credit score, and down payment.
In summary:
While it’s possible to pay your own property taxes and homeowners insurance when buying a home in Phoenix, it’s not always the standard practice, especially with smaller down payments. You’ll need to discuss this with your lender to see if it’s an option for your specific situation.