How Property Taxes Can Impact Your Mortgage Payment
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 two acronyms in your paperwork – P&I or PITI – 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 they’re 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.”
TaxRates.org provides an annual review of property taxes by state (including the District of Columbia), from lowest to highest, as a percentage of median home value. Overall, the state of Florida's median property tax rate is estimated at 0.97%. 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 Louisiana, Hawaii, Alabama, and Delaware, followed by the District of Columbia.
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, have a conversation with your lender and Realtor about the property tax rates in he neighborhood or area you are interested in buying your first home. Property taxes can make a difference in your overall costs when buying a home. We invite you to visit us at hfamiami.com/homebuyers for find out more about our fixed interest-rate mortgage and generous down payment and closing cost program.