All homeowners are required to pay property taxes on their home. The amount of tax you will pay varies depending on the city or county where you live. The City Approved Rate for Real Estate Tax in Alexandria City is $1.11 per $100 of assessed value in 2023. You can pay your taxes one of two ways.
The most common way to pay your property taxes (if you have a loan) is as a part of your monthly mortgage payment, often referred to as your PITI which stands for principal, interest, taxes, and insurance. The T in PITI stands for your property taxes.
Property Taxes Can Be Included in Your Mortgage
In this scenario, your lender collects approximately one-twelfth of your taxes each month as part of your mortgage payment and places it in an escrow account (effectively a savings account). Then your lender will pay your taxes to the city/county for you. Don’t be alarmed if you still receive a tax bill – DON’T PAY IT! Just alert your lender that you received it. Most lenders actually require you to pay property taxes as part of your monthly mortgage payment unless you have paid down your loan to a certain determined amount. Buyers typically prefer to pay their taxes this way as well as it is once less bill you have to worry about keeping track of, and it allows you to paydown the bill in smaller increments. If your yearly tax bill is $12,000 for example, you would be paying $1,000 per month as part of your mortgage payment instead of two $6,000 payments to the city.
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An Alternative Payment Method
The other alternative to pay your real estate taxes is to remove the T from your PITI and not have a lender escrow account. You would then just make your tax payments twice yearly when you receive the tax bill.
The good news is when you calculate your mortgage payment, it already takes into account your property tax bill, so it is not an additional charge. If you decide not to do an escrow, your mortgage payment would then be lowered by that amount.
Question on this process? Contact us! We are always happy to help.
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