Are you one of the many homeowners who have seen a significant increase in your property value? While this is excellent news for your equity growth, it can also be a cause for concern when it comes to your property taxes. You may be wondering whether your mortgage payment will increase due to your property assessment.
The answer to this question depends on two factors:
- The Assessed Value of Your Property
- The Local Tax Rate
The assessed value is usually based on recent sales of similar properties in the area, while the tax rate is set by local government bodies like city councils or county commissioners.
However, some areas have measures in place to limit tax increases, even in the face of rising property values.
These measures can include homestead tax exemptions, which allow you to exclude a certain amount of your property’s value from tax calculations, or assessment limits that prevent assessments from increasing by more than a certain percentage each year.
For instance, in Iowa, taxes cannot be raised by more than 3% annually, so it’s possible that your taxes may not increase as much as you expect based on your most recent property assessments.
While rising property values are good for building wealth and equity, they don’t necessarily mean that your property taxes will skyrocket and affect your mortgage payment.
If you’re concerned about your property tax bill and how it might impact your monthly mortgage payment, reach out to a tax professional or myself.
We can help provide specific guidance on how assessments and tax rates might affect your mortgage payment. It’s better to be prepared with answers now than to be caught off guard by a sudden change in your mortgage payment later.