How do property taxes affect mortgages in Oregon?

@lucius  Property taxes can affect mortgages in Oregon in several ways:

1. Escrow Accounts: Many mortgage lenders in Oregon require borrowers to establish an escrow account to cover property taxes and homeowners insurance. Each month, a portion of the borrower's mortgage payment is deposited into the escrow account, and the lender uses these funds to pay the property taxes and insurance when they are due. This ensures that the taxes are paid on time and helps borrowers budget for these expenses.
2. Tax Impounds: Some lenders may require borrowers to pay a lump sum upfront to cover property taxes for a certain period, known as tax impounds or prepaids, at the time of closing. This amount is then deposited into the escrow account, and the lender uses it to pay the property taxes when they become due. Tax impounds may be required for borrowers who have less than 20% equity in their homes or who have lower credit scores.
3. Impact on Affordability: Property taxes can affect a borrower's ability to afford a mortgage. Higher property taxes mean higher monthly housing expenses, which can reduce the amount of mortgage a borrower can qualify for based on their income and debt-to-income ratio. Lenders typically factor property taxes into the calculation of a borrower's housing expenses when determining loan eligibility.
4. Tax Deductions: In Oregon, homeowners may be eligible to deduct a portion of their property taxes on their federal income tax return. This deduction can reduce the overall cost of homeownership and may make homeownership more affordable for some borrowers. However, it's essential to consult with a tax advisor to understand the specific tax implications and deductions available based on individual circumstances.
5. Tax Assessment Increases: Property tax assessments in Oregon can increase over time, especially as property values rise. If property taxes increase significantly, homeowners may see an increase in their monthly mortgage payments if they have an escrow account. Lenders may adjust the escrow payments to ensure that there are sufficient funds to cover the higher taxes.

Overall, property taxes are an important consideration for borrowers in Oregon when obtaining a mortgage. Working with a knowledgeable mortgage lender and understanding how property taxes impact the overall cost of homeownership can help borrowers make informed decisions and budget effectively for their mortgage expenses.