HOW - Home Ownership and Taxes Lesson

Home Ownership and Taxes

Introduction

Similar to owning a vehicle, houses also come with additional fees and payments to consider. Two of the major ones are real estate taxes and home insurance. These are usually calculated as annual charges but added to your monthly mortgage payment. It helps that they are not separate payments, but this can definitely increase how much you will have to pay each month for your house!

Real Estate Taxes

In Your Notebook: Please take down important notes, such as formulas, and attempt the practice examples on your own before viewing the solutions!

Homeowners will have to pay city or county real estate taxes. The amount paid depends on the assessed value of your property and the tax rate. The tax rate is expressed as mills per dollar of valuation. A mill is $0.001. When working with mills, you can either multiply the mill by 0.001 or just divide by 1000 to get the decimal value.

Assessed Value = Market Value x Rate of Assessment

Real Estate Tax = Tax Rate x Assessed Value

 

In Your Notebook: Please take down important notes, such as formulas, and attempt the practice examples on your own before viewing the solutions!

Putting it All Together!

Taxes and insurance are typically charged as annual fees and distributed and added to your monthly mortgage payments. You usually pay in advance which means your taxes may be estimated and adjusted later if necessary. Ok, so what IS my monthly house payment, then? Let’s work through an example from start to finish to find the total monthly payment when taxes and insurance are added in. Try it on your own and then watch the video to see how you did!

Here is the information of your loan. 

 

 

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