When closing on March 15, how many months of escrow can a lender take for taxes?

A lender typically takes a certain number of months of escrow for property taxes at closing to ensure that tax obligations are met when they become due. In Colorado, property taxes are paid in arrears, meaning they are due after the tax year ends. When closing on March 15, the first property tax payment due would be in the following June.

To ensure the lender has enough funds set aside to cover the upcoming tax payment, they often require the borrower to deposit an amount equivalent to the tax payment for multiple months. The lender typically requires at least three months of escrow for taxes, covering the period until the next tax payment is due. This is to account for the time until the tax bill arrives and the need for sufficient funds to be available.

Therefore, when closing in mid-March, requiring three months of escrow ensures that funds will be available to pay the property taxes that are due shortly after the closing date, thus protecting the lender's interest in the property.