If you’re on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best optimize your experience.
Credit Cards
Banks
Brokers
Crypto
Mortgages
Insurances
Loans
Small Business
Knowledge
by Christy Bieber | Published on Oct. 21, 2022
Image source: Getty Images
Don't make a move without checking out this list.
Check out The Ascent's picks for the best mortgage lenders
When you buy a home, you need to plan for more than just your principal and interest payments on your home loan. You will also have to be ready to cover property taxes as well.
Some mortgage lenders require you to add property taxes onto your mortgage payment. If that’s the case, then they keep the money in escrow and pay the bill for you when it is due. But even if your lender doesn’t require this, you need to be prepared to pay your annual property tax bill.
Since you need to be ready to cover your property taxes, it’s important to realize that there is a lot of variation in tax rates across the United States. And residents of some states face far higher tax burdens than others.
In fact, if you live in, or move, to any of the following five states, you can expect to pay taxes at a very high rate.
Residents of New Jersey will pay more in property taxes, on average, than individuals living anyplace else in the country. According to the Tax Foundation, New Jersey residents pay an average of 2.21% of their housing value in property taxes each year.
New Jersey is one of the only two states where the effective property tax rate is above 2.00%. It’s also more than double the 1.08% effective tax rate homeowners pay across the U.S.
Discover: We ranked this company the Best Overall Mortgage Lender as a part of our 2022 Best-of Awards
More: Our picks for best FHA mortgage lenders
Illinois is the second of two states where effective property tax rates come in above 2.00%, along with New Jersey. Residents of Illinois will pay 2.05% of their home value. This is based on 2020 data from the tax foundation.
Property tax rates are very high in Illinois due to the fact Chicago residents pay a fortune in these taxes due to pension debt. There are eight pension funds in Chicago alone that have accumulated close to $45 billion in debt. And across all of Illinois, governments have $63 billion in total pension debt that residents have to pay.
New Hampshire is third on the list of states where there are substantial property tax bills homeowners must pay each year. In New Hampshire, the effective property tax rate is 1.96%.
Vermont residents also face a substantial property tax burden. The effective tax rate is 1.82% of home values in Vermont.
Finally, in Connecticut, residents pay an effective tax rate of 1.76% of home values. The Tax Foundation also found Connecticut homeowners pay 20% more taxes, as a percentage of housing value, than residents of neighboring New York and 50% more than Massachusetts homeowners.
If you move to these five locales, you can expect that your property tax rate will be especially high. But no matter where you live, you must take taxes into account when you decide how much home you can afford.
These taxes can add a lot to your monthly housing costs and many renters don’t realize just how big of a burden they can be when they start shopping around. Make sure to research these costs so you can make informed choices about whether a home you’re considering is affordable once all expenses are taken into account.
Mortgage rates are at their highest level in years — and expected to keep rising. It is more important than ever to check your rates with multiple lenders to secure the best rate possible while minimizing fees. Even a small difference in your rate could shave hundreds off your monthly payment.
That is where Better Mortgage comes in.
You can get pre-approved in as little as 3 minutes, with no hard credit check, and lock your rate at any time. Another plus? They don’t charge origination or lender fees (which can be as high as 2% of the loan amount for some lenders).
Read our free review
Christy Bieber is a personal finance and legal writer with more than a decade of experience. Her work has been featured on major outlets including MSN Money, CNBC, and USA Today.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Related Articles
Find the Best Mortgage Rates
Best Mortgage Lenders for 2022
Best Mortgage Refinance Lenders for 2022
Best Mortgage Lenders for First-Time Homebuyers
Find the Best Mortgage Rates
Best Mortgage Lenders for 2022
Best Mortgage Refinance Lenders for 2022
Best Mortgage Lenders for First-Time Homebuyers
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 – 2022 The Ascent. All rights reserved.
