Property tax
An annual tax a local government charges on your home's assessed value, usually collected monthly into escrow as part of your mortgage payment.
What does property tax mean?
Property tax funds local services — schools, roads, emergency response — and is set as a percentage of your home's assessed value, which varies widely by state and county. Most lenders collect one-twelfth of the annual bill inside each monthly payment and hold it in escrow, then pay the tax when it is due. Because assessments and rates change, your payment can rise even on a fixed-rate loan.
Frequently asked
Why did my property tax go up?
Either your home’s assessed value rose or the local tax rate did. Because the tax is collected into escrow and paid on your behalf, an increase raises the escrow part of your monthly payment even on a fixed-rate loan.
Are property taxes included in my mortgage payment?
Usually yes. Most lenders collect one-twelfth of your annual property tax in each payment and hold it in escrow, then pay the bill when due — which is why a full payment is higher than principal and interest alone.
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