Property tax should be used by the local government for schools, police, fire department, and any local maintenance.
How the tax is calculated:
Assessed Value × Property Tax Rate = Property Tax
Assessed Value is not the same is as the price paid but is less than market value.
Property Tax Rate depends on where you live. Tax hikes and property reassessment can change how much you owe from time to time.
Property tax should not be more than 25% of the take home pay.
Typically, the mortgage payments include the principal, interest, homeowner’s insurance, and property tax. Lenders will divide the total property tax amount by 12 months, so buyers pay an additional amount as part of their monthly mortgage payments. Lenders set money aside in a separate account (escrow account) and uses it to pay property tax to local government when they are due.
Here is a big question many have:
Do I still need to pay property tax after I fully paid off my house?
Yes. Property tax is still required even after you paid off your mortgage. The money goes straight to the local government instead of the mortgage lender, and if it is not paid, then the government will sell your house to make up for the money owed to them.
