## Does Your Mortgage Include Property Tax?
When you take out a mortgage to buy a home, you are typically required to pay property taxes in addition to your mortgage payment. However, there are some cases in which your mortgage may include property taxes.
### What is property tax?
Property tax is a tax levied by local governments on the value of real estate. The amount of property tax you pay is based on the assessed value of your property, which is determined by the local tax assessor.
### Why is property tax included in some mortgages?
In some cases, lenders may require borrowers to pay property taxes as part of their mortgage payment. This is typically done to ensure that the borrower has the funds to pay their property taxes on time. If the borrower does not pay their property taxes, the lender could foreclose on the property.
### How can I find out if my mortgage includes property tax?
You can find out if your mortgage includes property tax by reading your mortgage contract. The contract will state whether or not property taxes are included in your mortgage payment.
### What are the benefits of having property tax included in your mortgage?
There are several benefits to having property tax included in your mortgage, including:
* **Convenience:** You don’t have to worry about making a separate payment for property taxes.
* **Peace of mind:** You know that your property taxes will be paid on time, which can help you avoid penalties and interest charges.
* **Easier budgeting:** You can budget for your mortgage payment and property taxes all at once, which can make it easier to manage your finances.
### What are the drawbacks of having property tax included in your mortgage?
There are a few potential drawbacks to having property tax included in your mortgage, including:
* **Higher mortgage payment:** Your mortgage payment will be higher than it would be if property taxes were not included.
* **Less flexibility:** You cannot adjust the amount of your property tax payment without refinancing your mortgage.
* **Potential for overpayment:** If your property taxes decrease, you may end up overpaying on your property taxes.
### Should I have property tax included in my mortgage?
Ultimately, the decision of whether or not to have property tax included in your mortgage is a personal one. There are both benefits and drawbacks to consider, and the best decision for you will depend on your individual circumstances.
### **Here are some factors to consider when making your decision:**
* **Your financial situation:** Can you afford to pay a higher mortgage payment if property taxes are included?
* **Your risk tolerance:** Are you comfortable with the potential for overpaying on your property taxes if your property taxes decrease?
* **Your tax situation:** Do you itemize your deductions on your income tax return? If so, you may be able to deduct your property taxes.
### **If you are considering having property tax included in your mortgage, be sure to shop around for the best interest rate and terms.** You should also read your mortgage contract carefully before you sign it.
## **FAQs**
**Q: What happens if I don’t pay my property taxes?**
A: If you don’t pay your property taxes, the local government may put a lien on your property. This means that you will not be able to sell or refinance your property until the property taxes are paid. In some cases, the government may even foreclose on your property.
**Q: Can I get a refund if my property taxes decrease?**
A: If your property taxes decrease, you may be able to get a refund from your lender. However, you will need to contact your lender to find out if they offer refunds.
**Q: What is the difference between an escrow account and an impound account?**
A: An escrow account is a special account that is used to hold funds for the payment of property taxes and insurance. An impound account is a type of escrow account that is used specifically for the payment of property taxes.
**Q: Do all lenders offer mortgages that include property tax?**
A: Not all lenders offer mortgages that include property tax. However, many lenders do offer this option.
**Q: What are the advantages of having an escrow account?**
A: There are several advantages to having an escrow account, including:
* **Convenience:** You don’t have to worry about making separate payments for property taxes and insurance.
* **Peace of mind:** You know that your property taxes and insurance will be paid on time, which can help you avoid penalties and interest charges.
* **Easier budgeting:** You can budget for your mortgage payment, property taxes, and insurance all at once, which can make it easier to manage your finances.
**Q: What are the disadvantages of having an escrow account?**
A: There are a few potential disadvantages to having an escrow account, including:
* **Higher mortgage payment:** Your mortgage payment will be higher than it would be if you did not have an escrow account.
* **Less flexibility:** You cannot adjust the amount of your escrow payment without refinancing your mortgage.
* **Potential for overpayment:** If your property taxes or insurance premiums decrease, you may end up overpaying into your escrow account.
**Q: Should I have an escrow account?**
A: Ultimately, the decision of whether or not to have an escrow account is a personal one. There are both advantages and disadvantages to consider, and the best decision for you will depend on your individual circumstances.