How Property Taxes Can Influence Your Mortgage
When buying a home, taxes are one of the expenses that can make a significant difference in your monthly payment. Do you know how much you might pay for property taxes in your state or local area?
When applying for a mortgage, you’ll see one of these acronyms in your paperwork – P&I, PITI, or PITIP – depending on how you’re including your taxes in your mortgage payment.
P&I stands for Principal and Interest, and both are parts of your monthly mortgage payment that go toward paying off the loan you borrow. PITI stands for Principal, Interest, Taxes, and Insurance, and PITIP which stands for Principle, Interest, Taxes, Insurance and Private Mortgage Insurance (PMI) . The taxes, Insurance and PMI are all part of the escrow account, they are all important factors to calculate when you want to determine exactly what the cost of your new home will be.
TaxRates.org defines property taxes as,
“A municipal tax levied by counties, cities, or special tax districts on most types of real estate – including homes, businesses, and parcels of land. The amount of property tax owed depends on the appraised fair market value of the property, as determined by the property tax assessor.”
This organization also provides a map showing annual property taxes by state (including the District of Columbia), from lowest to highest, as a percentage of median home value.
The top 5 states with the highest median property taxes are New Jersey, New Hampshire, Texas, Nebraska, and Wisconsin. The states with the lowest median property taxes are Alabama, Louisiana, Hawaii, West Virginia, and South Carolina
Depending on where you live, property taxes can have a big impact on your monthly payment. To make sure your estimated taxes will fall within your desired budget, let’s get together today to determine how the neighborhood or area you choose can make a difference in your overall costs when buying a home.