What Is a Tax Service Fee?

Introduction

The tax service fee pays for a third-party service that monitors property tax payments and notifies the lender if taxes become delinquent. This helps protect the lender's interest, since unpaid property taxes can result in a lien that may take priority over the mortgage.

See What Is Escrow (for how taxes are paid from escrow) and What Are Closing Costs.

Frequently Asked Questions

What is a tax service fee?

The tax service fee pays for a third-party service that monitors property tax payments and notifies the lender if taxes become delinquent. This helps protect the lender's interest in the property.

How much does tax service cost?

Tax service fees are typically $50 to $100 or so. The fee appears on your Loan Estimate under "Services You Cannot Shop For."

Why do lenders require tax service?

If property taxes go unpaid, the tax authority can place a lien that takes priority over the mortgage. Tax service helps lenders stay informed and take action if needed.

Can I avoid the tax service fee?

Usually no. Lenders typically require tax service as a condition of the loan. The fee is generally non-negotiable.