Property Taxes on the Rise? What does it mean for you?

For many aspiring and current homeowners, understanding the impact of property taxes is crucial, especially in environments where these taxes are on the rise. Property taxes can significantly affect the overall affordability of owning a home, influencing everything from monthly mortgage payments to long-term financial planning. Here’s what you need to know about the effect of rising property taxes on homeownership and how to manage this challenge.

Understanding Property Taxes

Property taxes are local taxes assessed by municipalities to fund various public services such as schools, road maintenance, and emergency services. The amount you pay in property taxes is determined by the assessed value of your property and the tax rate set by local government entities.

Impact on Monthly Mortgage Payments

For homeowners with escrow accounts, property taxes are included in monthly mortgage payments. When property taxes rise, so do these monthly payments, potentially by a significant amount. This can impact affordability, especially for those on fixed incomes or tight budgets.

Home Affordability

Rising property taxes can also affect home affordability in a broader sense:

• Entry Barrier: For potential homebuyers, higher property taxes can raise the minimum income required to qualify for a home loan, as lenders consider all housing-related expenses when calculating debt-to-income ratios.
  
• Market Dynamics: In areas with steep property tax increases, the demand for homes can decrease. Property values might stabilize or even decline if the taxes become a deterrent for buyers, impacting sellers and current homeowners who may see less equity growth than anticipated.

Long-term Financial Planning

Homeowners need to consider property taxes in their long-term financial planning:

• Budget Adjustments: Homeowners may need to adjust their budgets to accommodate higher monthly payments due to increased taxes.
   
• Reduced Disposable Income: Higher property taxes mean homeowners have less money to spend on other expenses or investments, potentially affecting overall financial health.

Strategies to Manage Rising Property Taxes

• Contesting Property Assessments: If you believe your home’s assessed value is inaccurately high, you can challenge the assessment. This involves researching comparable home prices and possibly working with a real estate expert.
  
• Homestead Exemptions: Many localities offer homestead exemptions that can reduce the taxable value of a home for primary residences, which can be a significant saving.
  
• Senior and Veteran Exemptions: Additional exemptions often exist for seniors, veterans, and other groups, which can help reduce the property tax burden.

Advocating for Tax Caps or Adjustments

Homeowners and buyers should be aware of their ability to participate in local governance, including attending town or city council meetings where tax rates are discussed. Advocating for reasonable tax caps and increases can help keep communities affordable for everyone.

Rising property taxes are a significant consideration in homeownership, impacting everything from monthly expenses to long-term financial strategies and even local real estate markets. 

At Choice Mortage, we aren’t tax professionals, but we can help point you in the right direction if you need assistance with your property taxes. By understanding how property taxes work and exploring available options for relief and management, we can help you better prepare for and mitigate the effects of these increases.

For more information about Choice Mortgage Group and how we can help you, visit www.choicemortgage.com.

Choice Mortgage Group
2424 N Federal Hwy, Suite 100 Boca Raton, FL 33431
(561) 395-6900
info@choicemortgage.com