What are property taxes and how do they affect my mortgage payment?
See how locally assessed property taxes can change the true cost of owning a home.
Property taxes are charges generally imposed by local taxing authorities based on the property and applicable local rules.
They can materially affect the cost of owning a home and may be collected monthly through a mortgage escrow account.
Tax amounts vary by location and property and can change over time, so an early estimate is not a permanent bill or tax advice.
How taxes enter the payment
If the mortgage uses escrow, the lender or servicer generally collects an estimated monthly amount and pays the tax bill when due. Without escrow, the homeowner typically pays the taxing authority directly.
Why the amount can change
Assessments, tax rates, exemptions and local decisions can change. A servicer may adjust the escrow portion of the payment after an escrow analysis.
What to verify before buying
- The current tax information for the specific property
- Whether quoted taxes reflect an exemption that may not apply to you
- Which tax items are included in escrow
- When reassessment may occur under local rules
Use local information
A lender or real estate professional can explain transaction estimates, but the appropriate local taxing authority is the source for the property’s tax record and local rules.
Plan for costs beyond principal and interest
Continue learning with focused, plain-English answers in the HoopCasters Answer Library.