For a homeowner of good credit and great frugality, it should be more than possible to pay your taxes when they come due. However, for those who have been lucky enough to sign up for a mortgage, most banks will be administering their property taxes, home insurance, and miscellaneous expenses of home ownership through an escrow account, which earns little to no interest and requires a deposit to maintain.
For a borrower with good credit, it is possible to set up a brokerage account with the equivalent of a year's property taxes held in fief, at rates of up to 3% interest at a service like ING or Capitol One. Currently Capitol One is offering a bonus for opening any kind of account, between $25 for a simple savings account to $50 for a checking account and $150 for a Sharebuilder account.
Once you have that bank account set up and funded, you can use it as a guarantee that you will be able to pay insurance and your mortgage servicing bank will release your deposit back to you, usually a check for $500 or more, as well as the balance in your escrow account at that time.
From then on, you can just put that money into a dedicated savings account and earn interest on it during the year, then use it to pay your homeowner's insurance and taxes every April. If you would like, you can even pay your taxes in quarterly installments under this scenario, just like one would do with a small business or contracting income.
Not only do you save money, earn interest, and receive a big fat check, you get to be more responsible for your own finances!
Now all I need to do is pick a house to live in, and I can start using all of these cool tricks.
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