Factoring Property Taxes Into Your Mortgage

Like insurance, property taxes are often a forgotten part of a mortgage payment. Property taxes can go up as time goes on as the value of your home rises. Therefore, considering this aspect of your mortgage payment before you buy can help save you money and frustration when choosing your new dream home.

How Are Property Taxes Calculated?

There are two factors that determine how much you will pay in property taxes on your new home:

• Your local county tax rate
• Your property’s total assessed value

Multiplying your property’s assessed value rate by the county tax rate will provide you with your yearly tax payment.

How Do I Pay My Property Taxes?

Homeowners who take out a typical 30-year fixed rate mortgage will not usually pay the property taxes directly to the government, but rather will have an escrow account setup with their mortgage provider who will pay the taxes on their behalf. The reason for this is because the lender has a vested interest in your home and does not want the government placing a lien on their collateral.

Therefore, when you take out a mortgage, expect to have one consolidated bill from your mortgage provider that includes: 

• Mortgage (principal and interest)
• Mortgage insurance (if applicable)
• Property tax
• Home insurance (flood insurance if applicable) 

Since the total mortgage payment is made up of all of these amounts, potential homeowners must factor these bottom-line figures into how much house they can comfortably afford.

Tax Rates in Florida Vary

Hillsborough County, which includes Tampa is reported to have the highest median property tax for any county in Florida. However, Orlando, located in Orange County, has the highest medium median property taxes for a city in all of Florida. On average, the property tax rate in Florida is 1.1 percent of the assessed value, although that can fluctuate depending on where you live. Even more reason to not overlook the impact that taxes have on your property purchase.

Homestead Exemptions

If you are planning to make the home your primary residence, Florida allows you to obtain a $25,000 exemption, called a Homestead Exemption.  This lowers the assessed valuation causing your property taxes to be reduced. You can apply for this exemption with your county after January 1st following the year in which you purchased the property.

Get the Best Rates at Butler Mortgage

Don’t let property taxes deter you from owning a home. Contact the mortgage professionals at Butler Mortgage. We have over 25 years’ experience working with buyers who want to own a home in the Central Florida area. Let us help find you the best loan solution for your needs by calling 407-931-3800 or by filling out our free consultation form online.