Paying property taxes is one of the many costs associated with owning a home. While expensive, property taxes help fund local operations such as roads, schools, and emergency services.

Whether you are a first-time homebuyer or purchasing a second home, you might be wondering, “are property taxes included in a mortgage?” Anew Lending, one of Sacramento’s leading mortgage lenders, is here to answer that question and make it easy for you to understand local tax laws so you can budget properly.

What Are Property Taxes?

Property taxes are yearly fees levied by the jurisdiction where your house is located. Taxes help pay for public services in the community. The state government controls the payment and allocation of property taxes in most places. However, the federal government or a local jurisdiction may control taxes in specific locations.

Who is Responsible for Paying Property Taxes?

You are responsible for paying property taxes when you buy a home. Each state sets its own tax rate; California’s average property tax rate is 0.73%, which is lower than the national average.

Landlords and other commercial property owners must pay the tax bills on their own houses—but are property taxes included in mortgage payments?

You pay your property taxes with your monthly mortgage payment if you choose escrow during the loan financing process. Most mortgage lenders calculate monthly fees by dividing your annual tax amount into monthly installments and adding it to your other expenses. Thus, your loan balance reflects your property taxes, principal interest, and homeowners’ insurance.

If you pay cash for your home and have no mortgage, you are still responsible for paying property taxes each year.

How Much Are My Property Taxes?

How much you pay in taxes depends on your home’s value and your government’s tax rate. If your home is worth $250,000 and your tax rate is 1%, your annual bill will be $2,500. You will pay about $210 toward your annual tax bill each month if you pay it with your mortgage payment.

Do I Qualify For Property Tax Exemptions?

Some states provide tax exemptions to help homeowners save on property taxes. While the requirements vary by state, you must use your house as your primary residence to qualify in most cases.

Simplify Your Property Tax with Anew Lending

Are property taxes included in mortgage payments? Understanding how much you owe in property taxes and how to pay them is complicated.

Anew Lending is a full-service direct lender that specializes in mortgage lending. We make it easier for homebuyers to calculate property taxes by providing resources such as a glossary of mortgage terms.

If you want to buy a home or refinance your current loan, contact us today at (916) 226-9991 to set up an appointment with an Anew Lending loan specialist.

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