How to Calculate Mortgage Payments Including Taxes
When obtaining government-insured loans on property such as FHA or VA loans, many times these entities require that you have an escrow account set up in which your payment includes your property taxes and homeowner's insurance. Since these factors can make a huge difference in your payment, it is important to know how to calculate your property taxes into your mortgage payment to fit in with your monthly budget. It is also important to know that property tax payments can go up or down, based on the appraised value of your home.
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Instructions
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Begin with your monthly principal and interest amount. For this example we will use a home that is appraised (valued) at $100,000. The taxes on this property for this example will be 2 percent of the appraised value.
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Use an amortization table to look at how much your monthly principal and interest payments are on the amount financed over 30 years with a rate at 6 percent. You can locate these very easily on bankrate.com (see Resources below) in order to obtain a monthly amount.
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Look up the last tax appraisal done on the property. This can be done for free by visiting the county clerk's appraisal website in most areas. If your records are not available online you will need to visit the county tax assessor's office in person to request a copy of the last tax appraisal done on that property.
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Estimate the property taxes by pulling the estimate from the prior year. In this example on a home that you are financing worth and valued at $100,000 by the tax assessor's office at a tax rate of 2 percent you would estimate the property taxes like so: $100,000 x 2 percent = $2,000 per year.
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Take last year's tax assessed value and divide that by 12. For this example the taxes were $2,000 per year. So $2,000 / 12 = $166.67 per month. You would then add this amount to your monthly principal and interest payment to come up with a complete and total amount for your property taxes. This is how to calculate your monthly payment completely, including your property taxes.
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Tips & Warnings
File a homestead exemption with the tax office each year to receive deductions on your property tax amount.
Remember that property taxes fluctuate, so don't expect them to stay stable for lengthy periods of time. They will increase or decrease each year depending on market conditions.
