Property Taxes
What Are Property Taxes?
Property taxes are annual taxes levied by local governments on real estate.
They fund services such as:
- Public schools
- Infrastructure
- Emergency services
- Community programs
Property taxes are based on assessed value and local tax rates.
Why It Matters in a Mortgage
Property taxes:
- Are included in PITI
- Affect monthly escrow payments
- Influence housing affordability
If property taxes increase, monthly mortgage payments may rise after escrow analysis.
Failure to pay property taxes can result in liens or foreclosure.
How It Works
Assessed Value × Local Tax Rate = Annual Tax
Many lenders collect property taxes monthly through escrow.
Property Taxes vs. Assessments
Property Taxes → Government-imposed
Assessments → HOA or special district charges
Both affect housing costs.
FAQs About Property Taxes
Can property taxes increase?
Yes, reassessments and local rate changes can raise them.
Are property taxes deductible?
Possibly, subject to federal and state tax rules.
Do taxes vary by location?
Yes, significantly.
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