Lender Paying Property Taxes
1. I understand that the lender will take 1/12th of the estimated property taxes each month on top of my monthly mortgage payment and put this in an account from which they will pay property taxes. Our home just closed last week, and the first property tax installments will be due before the account has a large enough balance. I've read that lenders will still pay the taxes, but we'll be paying interest at the same rate as our mortgage on that overdraft amount. Is there a way that I can make a lump sum payment to this tax account to avoid this interest, or pay the city myself directly?
2. Do I need to do anything in terms of forwarding the tax bill from the city to my lender, or will the lender find out the installment due dates and amounts on their own?
3. I understand that this is a requirement for hi-ratio mortgages, and that at such time that my equity in the home reaches 20%, I can choose to cancel this arrangement and pay the property taxes on my own. For this 20% figure, is it based on the purchase price of the home and total size of mortgage (e.g. let's say $500,000 purchase price, $50,000 down = 10%. Once another $50,000 of principal is paid, equity is now considered to be 20%) or is it based on appraised value of the home (e.g. home is appraised at $562,500, mortgage was for $450,000, $450,000 is 80% of %562,500, equity is now considered to be 20%). If the latter, does the bank need to do the appraisal, or could I do it?
Anything else I need to know/worry about in terms of having the lender collect and pay property taxes on my behalf?