Property taxes can be confusing for any homeowner to comprehend. It is important to know your options when paying property taxes, and what the best option is for you. When you purchase a home or a piece of property, it will come with a property disclosure, telling the homeowner the information on the house, including the annual property tax. You will know up front how much you will owe in property taxes each year, and if this price fluctuates, the assessor’s office should notify you of any changes. Ways to pay property taxes can differ depending on where you are in your homeownership, and where you are financially. Based on how much your property taxes are a year, you have a few different options on how to pay.

Paying Property Taxes Through Your Mortgage

When buying a house, many homeowners will get a fixed loan for a certain amount of years through a bank of their choosing. Most banks will offer the homeowner the option of having the bank take care of the payments for property taxes through an escrow account. What the bank does is look at the property disclosure, and identifies how much the property taxes for that piece of property are each year. They will then divide this number up into monthly payments, and add it onto your existing mortgage. This extra money you are paying each month goes into an escrow account, and when property taxes are due, the assessor’s office will notify the bank, and they will take out your money from that account and pay the taxes. For example, if your mortgage is $1,000 a month and your property taxes are $1,000 for the year, (Note, these numbers are fictional, and do not reflect any situation and are for teaching purposes only) the bank says over 12 months, your property tax payment would be $83 each month. So, on top of the $1,000 you are paying for your house, you would give the bank an extra $83 dollars to ensure that your property taxes would be paid for. The bank will put this money into the escrow account and pay the taxes when they are due. This method is commonly used by homeowners who are first time buyers, and helps ensure that there will be no back taxes. It takes away the risk of foreclosure due to back taxes. It also gives concrete proof that you are paying your taxes.

Paying Property Taxes On Your Own

This method of paying taxes is usually used when people no longer owe a mortgage payment and own a home outright. This method is also used for people who do not feel comfortable with a bank handling their transactions and would rather take care of the bill themselves. Property tax due dates fluctuate from state to state, so check with your assessor’s office to ensure your specific due date. This way is simple, you will get a letter from the assessor’s office stating how much your property taxes are and when they are due, and you simply pay your money directly to them. This method differs from paying through a mortgage because the money isn’t saved in an account. This method is usually used when people are financially stable enough to ensure they will have the amount of money ready when needed. Homeowners can look at their property disclosure and budget according to due dates of the property taxes according to their area. This way takes out the middleman of the bank, but does not give the security of knowing the money is available when needed.