Are you a first-time homebuyer or someone who hasn’t purchased a home in a long time? Do you find yourself wondering what to expect when it comes to property taxes? This is a common question that tends to come up pretty quickly when the topic of buying a home is addressed. Many first-time homebuyers are cautioned to keep their property taxes in mind when budgeting for their new home, and with good reason. Depending on where you live, your property taxes could be significant, and they could make a big difference in the overall price of your home and your monthly mortgage payment as well. Below, we’ve outlined some important information to help you learn what you can about what to expect and how to prepare for your property taxes.
How is property tax calculated?
Property taxes were created as a way to pay government employees of your town or county (such as police officers, firefighters and others) for their work. Therefore, it’s up to your local government to determine your property taxes. In order to do this, your home and the property it sits on are both assessed based on the market value of other houses that have sold recently in your area. You can also figure out an estimated property tax price by multiplying the tax rate you pay in your area by the value of your home in its assessment. You can do this yourself, and you can also ask your realtor to help you determine the property taxes on any home you’re looking into purchasing. You should have at least some idea of property taxes before you make an offer on your home.
When are property taxes paid?
When you purchase your home, you will need to pay property taxes as part of your closing costs. Depending on how you are buying your home, the way in which you make this payment may differ. For example, in some instances, you’ll need to pay these through a cashier’s check or another similar method. In other instances, you can group the payment into the same check you use to pay the rest of your closing costs. The time of year in which you close on your home will affect how much you need to pay in property taxes at the time, too; the rate will be prorated so that you only pay for the months in which you will own the home in the given year. When the next year begins, your taxes will go up to their normal annual amount.
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