Learn how property taxes can impact your monthly mortgage payment and ways to manage adjustments effectively

A man and woman, sitting at a table in their home, looking over documents

Paying property taxes is one of the many responsibilities (and expenses) of homeownership. Because they may change each year, it’s critical to understand how property taxes are determined, so you can better manage your housing costs — including your monthly mortgage payment.

What are property taxes?

Property taxes fund essential community expenses such as public education, parks and recreation, government employees’ salaries and benefits, road construction, law enforcement services, and fire departments.

What is a property tax assessment?

A property tax assessment provides the market value of your property (land and house) that local governments use to calculate your property tax bill. Assessments are usually prepared on a specific date each year, but the timing may vary by jurisdiction — and in some places, an assessment is required whenever a property changes ownership.

A home in a neighborhood

Why do property taxes fluctuate?

Your property assessment will fluctuate over time due to the rise and fall of property values in your area. For example, rising property values usually indicate a healthy real estate market. And although you may not want to pay more property tax, the increase may be beneficial to you, especially if you choose to sell your home or use your home’s equity.
You may also see your property tax go up if you’ve made a significant renovation to your home, and it’s determined in the new assessment that you can sell your home at a higher price. Additionally, your property tax may increase a year after moving into a newly built or new construction home. And you may also see a tax increase if the state or local legislature votes to raise money for school needs or other improvement projects in your community.

On the other hand, if property taxes drop, it doesn’t always mean the value of your property has fallen. In some cases, your taxes may be lower because you qualify for a tax exemption, or other economic circumstances are impacting real estate in your area.

You have the right to appeal your property assessment. Contact your tax assessor to get details about the process in your area and what documentation you’ll need to provide.

How can you prepare for property tax changes?

You can easily prepare for changes to your property taxes by maintaining an escrow account. Each year, your lender will calculate the funds needed in this account to pay your property taxes (and will do so on your behalf). For example, if you have a Wells Fargo escrow account, we’ll send you an annual escrow account statement that details your account activity and explains any monthly mortgage payment adjustments needed to fund your escrow account. So whether your property taxes go up or down, the amount you pay monthly into your escrow account will adjust accordingly.

Learn how your Wells Fargo escrow account works.

If you don’t have an escrow account, you will pay your property taxes directly to the city or county each year. But setting up an escrow account with Wells Fargo is easy. Simply contact a Wells Fargo home mortgage consultant to get started.

Get the details you need about Wells Fargo escrow accounts.