How Are Property Taxes Calculated When Buying a Home?

Reader Question: "I have two questions. My first is, when buying a home how are your taxes calculated? Is it based on the selling price (foreclosure), or the appraisal value (much higher)? Also my husband signed loan application papers with a mortgage company and for a while could not get in touch with them, so he got approved with another mortgage company, is this okay? Or will there be penalties?"

Property taxes are based on the county's assessment of the home value. If you feel the county's assessment is too high, and that you're paying too much tax on the home, you can dispute the assessed value of the property.

If you wish to pursue this, you can probably find some information on your county's website. Or you could just call them and ask how to dispute the assessed value of the home. In most cases, you would simply fill out a dispute form and submit it through proper channels. They will then reassess the property and, if necessary, adjust your property taxes.

As for your second question about going with a different lender, you'll have to read the fine print in the application form you submitted to the first lender. In most cases, there is some kind of fee for canceling an application. Read through the paperwork for a clause labeled as "Cancellation Policy" or something similar.

Related article:
Tax Adjustments During the Closing Process

Hope that helps. Good luck.