What is the difference between improved and un-improved taxes?
Often municipalities only access property values for tax purposes once a year. When purchasing new construction, it is very possible that for the first year you live in it the property taxes will be based on the un-improved property (vacant lot) as opposed to improved property (with the finished house on it). The reassessment of the value will of course cause the tax bill to increase. We recommend escrowing for taxes at an estimate of the improved rate to limit the amount of increase the borrower will see in their payments once the property is reassessed.
