Millions of homeowners dedicate their income to mortgage payments and property taxes every year. If you intend to purchase a home in the future, knowing how mortgage payments and property taxes work and intertwine can give you a better understanding of where your money goes.
How does property tax work?
Property tax is collected by your local government and allocated to provide resources for citizens such as state parks, schools, road improvement and more.
The property tax amount is calculated based on the local property tax rate and the value of your home.
Mortgages & property taxes
Your mortgage insurance includes more than the raw amount of your home. In addition to the cost of the home borrowed, the amount also covers interest rates, mortgage insurance, homeowners insurance and the property tax for your district.
Your mortgage lender estimates the amount of property tax you’ll owe at the end of the year based on the property tax rate of your area and divides it by 12.
This amount is then added into your monthly mortgage payments. If you underpay, you’ll owe money to the government, but if you overpay, you’ll receive a tax refund.
What about after I pay off my house?
Paying off your mortgage is a gradual process worthy of celebration. However, once the house is paid off, it’s essential to remember yearly property taxes are still due.
To stay on top of payments, you can contact your local government, and they can invoice the amount you owe each year. They may also offer you multiple payment options, as some require one lump sum per year, while others may offer quarterly payments.
Understanding your property tax options puts you ahead of the game and helps you better understand how your money helps to improve your community’s overall well-being.
About the Author
John Hassler
Our goal is overcoming the housing challenge and getting to know one another, here is a bit about me. Providing you with professional guidance for buying and selling homes stems from an in-depth knowledge of the Twin Cities Best Homes and Neighborhoods. For us, the process is a simple one and starts with a conversation about your needs, desires and concerns. No contracts or promises up front. I ask only for the opportunity to understand your housing needs and have you become comfortable with my real estate knowledge and experience. I have lived throughout the metro area, have sold close to 1000 homes as well as built, remodeled and designed homes. My passion is assisting you in discovering that perfect home, location and setting that will bring you and your family pleasure and comfort for years to come. I would enjoy the opportunity to meet with you at your home, business or over a cup of coffee. I am readily available by email, text and enjoy a phone call as well. Please don’t hesitate to contact me, as I always enjoy a new opportunity to help someone!
