Understanding Proposition 13
Want to understand property taxes in California? Let’s break down how these taxes impact your monthly mortgage costs. At LBC Mortgage, we help homebuyers navigate this complex aspect of homeownership every day.
California’s Proposition 13 sets the rules for property taxes. Here’s what you need to know:
- Your base tax rate starts at 1% of your purchase price
- Your property gets assessed when you buy it
- Your tax can only go up by 2% each year
For example: Buy a $500,000 home? Your base property tax starts at $5,000 per year. That’s about $417 monthly on top of your mortgage payment.
Your Monthly Payment Structure
Your mortgage payment includes more than just the loan. We call it PITI:
- Principal (pays down your loan)
- Interest (cost of borrowing)
- Taxes (property taxes)
- Insurance (homeowners insurance)
Most lenders use impound accounts (also called escrow accounts) to handle taxes. We collect a portion of your taxes with each mortgage payment. Then we pay your tax bill when it’s due. This helps prevent surprise tax bills.
Our Expert Tip
“Many buyers focus only on the loan amount when planning their budget,” says our senior mortgage advisor. “We make sure you understand your full monthly cost, including property taxes. This prevents payment shock later.”
Property Tax Payment Timeline
Your tax collector splits your annual bill into two payments:
- First payment: Due November 1 (delinquent after December 10)
- Second payment: Due February 1 (delinquent after April 10)
Tax bills get mailed to your home each year. But with an impound account, you won’t need to worry about these deadlines. We handle the payments for you.
Need help calculating your true monthly payment? Our team at LBC Mortgage will create a detailed estimate that includes all tax costs. We believe in clear, upfront numbers so you can buy with confidence.
Breaking Down Property Tax Impact
Your monthly mortgage payment can change significantly based on property taxes. We regularly help our clients understand these costs with real examples. Take a $600,000 home in California. The base property tax adds about $500 to your monthly payment. But that’s not the whole story.
Understanding Supplemental Tax Bills
First-year homeowners face an extra cost: supplemental tax bills. These bills cover the difference between the previous owner’s tax rate and your new rate. Most new homeowners need to pay this on top of their regular mortgage payments. At LBC Mortgage, we make sure you’re prepared for this extra expense.
Special Assessments and Mello-Roos
Some neighborhoods have additional taxes called Mello-Roos or special assessments. These fund local improvements like schools, roads, or emergency services. We check for these costs before you buy. A home’s listing price might look attractive, but Mello-Roos can add hundreds to your monthly payment.
Common First-Time Buyer Mistakes
Many new homeowners miscalculate their monthly costs. They see the base tax rate but forget about supplemental bills. Others don’t realize home improvements can trigger reassessment. Some assume their tax rate won’t change. We prevent these costly surprises.
How We Help You Plan
At LBC Mortgage, we create detailed payment forecasts for every client. Our calculations include all tax scenarios you might face. We look at your specific neighborhood, check for special assessments, and explain supplemental bills. This helps you budget accurately from day one.
Long-Term Tax Planning
Property taxes often increase over time. While Proposition 13 limits annual increases to 2%, other factors can raise your bill. Home improvements, new local assessments, or changes in special districts can impact your taxes. We help you understand these potential changes before you commit to a purchase.
Our Payment Protection Strategy
We recommend keeping a tax reserve fund for unexpected increases. This strategy has helped countless clients manage their property tax obligations smoothly. Our mortgage advisors will show you exactly how much to set aside based on your specific situation.
Smart Strategies for Property Tax Management
Planning for property taxes makes homeownership easier. Our experience at LBC Mortgage shows that impound accounts benefit most homeowners. These accounts spread your tax burden across twelve months instead of hitting you with large bills twice yearly. We set up your account with the right monthly amount from the start.
Tax Payment Options That Work
While impound accounts work well, some borrowers prefer to handle tax payments directly. We’ll help you weigh the pros and cons of each approach. Consider your budget style, savings discipline, and cash flow needs. Our mortgage advisors tailor recommendations to your financial situation.
Property Tax Relief Programs
California offers several tax relief options. Senior citizens, disabled veterans, and first-time homebuyers might qualify for exemptions or reduced rates. We know these programs inside and out. Our team will check your eligibility and help you apply for any tax breaks you deserve.
Special Property Situations
New construction homes need extra attention. Their tax bills often start low and jump significantly after the first assessment. Home improvements can also trigger tax increases. Even solar panels or room additions affect your tax bill. We factor these scenarios into your long-term payment planning.
Why Choose LBC Mortgage
Our deep understanding of California property taxes sets us apart. We don’t just process loans – we prepare you for successful homeownership. Every day, we help clients understand their true costs and avoid tax surprises. Our experience with local tax systems saves our clients money and stress.
Tools for Success
We provide each client with personalized payment calculators and tax planning tools. These resources help you visualize different scenarios and plan effectively. Our property tax expertise ensures you’ll know your true monthly costs before making an offer.
Your Next Steps
Ready to understand how property taxes will affect your mortgage? Contact us today. We’ll create a comprehensive mortgage plan that accounts for all tax considerations. Our team makes complex tax rules simple to understand and manage.
Call LBC Mortgage now at (818) 309-2999 or visit our website. Let’s make sure property taxes never catch you by surprise.
