How many months are typically added when calculating tax escrow?

When calculating tax escrow, it is standard practice to add 2 months to the total estimated property taxes for the upcoming year. This practice ensures that there are sufficient funds available to cover the property taxes when they are due. The additional months provide a buffer against any potential fluctuations in tax rates or property valuations, as well as ensuring that the escrow account is adequately funded in advance of the tax payment dates.

This approach helps protect both the borrower and the lender by minimizing the risk of missing tax payments, which can lead to penalties or the risk of tax liens on the property. Adding 2 months also aligns with typical lender requirements, providing a cushion that serves both the lender's and homeowner's interests in maintaining clear and timely financial management.