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me_irl (thelemmy.club)
submitted 2 months ago by to c/me_irl@lemmy.world
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[–] 17 points 2 months ago* (last edited 2 months ago) (3 children)

Note that if property values continue to increase, then your property tax will also increase. Therefore, your monthly payments on your mortgage can increase.

When I bought my home in 2020, my mortgage was a flat $2,600 to the penny. Now it's $2850.

The one good thing about that though is that property tax is deducted from your income, so you get 30 or 40% of that back at the end of the year depending on your overall tax bracket, and depending on where you live and what your property taxes are once you sum up the entire year, even though your mortgage is $200 more, you could actually be paying less in total.

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  • [–] 6 points 2 months ago (1 child)

    Not if you don't make enough to itemize deductions. Ask how I know 😮‍💨

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  • [–] 0 points 2 months ago (1 child)

    It's not about how much you make. It's about your deductions.

    All of your property tax is deductible. All of the interest on your mortgage is deductible. If your income is low enough, all with the interest paid on your student loans is deductible. Health care costs are deductible.

    If those plus your other deductions cross whatever the threshold is, then you itemize and if it doesn't, you take the lump.

    That's why I like FreeTaxUSA.com because it actually does all of your deductions and then tells you which one is the better choice for you.

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  • [–] 4 points 2 months ago (1 child)

    When I bought my home in 2020, my mortgage was a flat $2,600 to the penny. Now it’s $2850.

    Okay, but $250 over six years is a pittance compared to the equivalent hikes in rent.

    Like, I agree, property taxes keep creeping up on us. But so do fuel and food costs, utilities, etc. That's inflation for you. I'm also getting COA in my annual wage, so you could argue that I'm "part of the problem".

    Compare that to some landlord who can spike your rent because the market gets a bit tight, because the interest on their debt ticked up, because they want an excuse to renovate and are looking to scare people out of their leases, because they think they can squeeze us a bit harder, or for no reason at all. I watched my $800/mo rent balloon to $2000/mo over the five years before I bought a home.

    Getting a fixed rate mortgage is pretty much always better than renting, unless you need to change addressed every couple of years anyway.

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  • [–] 2 points 2 months ago

    I agree, I was just letting them know that a mortgage not going to stay at the same price throughout the entire length of the loan regardless of how it's set up.

    It could also decrease, like if there's a massive housing value crash and your house is now worth 20% of what you paid for it, then upside is your property taxes should also only be 20% of what they were.

    And the only reason why I even thought to share was because I myself was shocked when my mortgage increased after the first year, even though it was only like 60 bucks, I was like, man, I thought a mortgage was not supposed to change.

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  • [–] 1 point 2 months ago (2 children)

    Why would the mortgage payment go up if property taxes go up?

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  • [–] 3 points 2 months ago

    You typically escrow your property tax payments based on an estimate from your mortgage lender.

    So, if you were paying $1200 in taxes last year and $1320 this year, the extra $120/year (aka $10/mo) would get tacked onto whatever you're paying the mortgage lender.

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  • [–] 2 points 2 months ago (1 child)

    I'm speaking from an American perspective, but usually, when you have a loan, the loan requires that your property tax be paid and that you keep house home insurance on the property. And so to prevent difficulties, what they'll do is the mortgage company will bundle your choice of home insurance and the payments for your property tax into an escrow account.

    If your property taxes rise, then the mortgage company will tell you, hey, you either have to pay a lump sum to keep it at the same amount, or you have to start paying more every month.

    And since property taxes are a fairly set value, it honestly doesn't matter whether you pay them over each month or all as a lump sum, you're going to be paying the exact same amount because that's the amount of money that has been charged to you for owning the property.

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