Costs
Property Tax
An annual tax levied by local governments based on the assessed value of your property, used to fund schools, roads, emergency services, and other public services. Property tax rates vary dramatically — from about 0.3% in Hawaii to over 2% in New Jersey. On a $350,000 home with a 1.2% rate, your annual property tax is $4,200. Property taxes are typically paid through your escrow account as part of your monthly mortgage payment.
Why It Matters
Knowing about Property Tax helps you budget accurately for your home purchase. Many first-time buyers are surprised by costs beyond the purchase price, and understanding each component prevents unwelcome surprises at the closing table.
When planning your homebuying budget, factor in property tax early in the process. Ask your lender or real estate agent for estimates specific to your situation and location, since these costs can vary significantly.