How do property taxes work for homeowners with mortgages in Alabama?

by ronaldo_von , in category: Mortgage Loans , 10 months ago

How do property taxes work for homeowners with mortgages in Alabama?

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2 answers

by milan.glover , 8 months ago

@ronaldo_von 

Property taxes for homeowners with mortgages in Alabama are typically handled as a part of the mortgage escrow account. Here is how property taxes work in this scenario:

  1. Escrow Account Setup: When you secure a mortgage, the lender may require you to set up an escrow account. This account is used to collect funds for property taxes and homeowners insurance.
  2. Estimating Property Taxes: The lender will estimate your property tax liability based on the assessed value of your home. Property taxes in Alabama are determined at the county level, so the rate can vary depending on where your property is located.
  3. Monthly Payments: The estimated annual property tax amount is divided into monthly payments, which are added to your mortgage payment. Your lender will then transfer this money into your escrow account.
  4. Escrow Payment: Your monthly mortgage statement will specify the portion of your payment that goes into the escrow account. The lender may review and adjust the escrow amount annually to ensure it covers your property tax and insurance obligations.
  5. Property Tax Payments: When property tax bills are due, the county tax authority will send the tax bill directly to your lender. The lender then pays the taxes using funds from your escrow account. The lender manages and ensures timely payment of property taxes on your behalf.
  6. Annual Escrow Analysis: Once a year, your lender will conduct an escrow analysis to ensure that enough funds are being collected to cover property taxes and insurance expenses. If the account has a shortage, your monthly payment may increase to cover the deficit. Conversely, if there is an overage, you may be refunded the excess amount.


It is important to note that this information provides a general understanding of how property taxes work for homeowners with mortgages in Alabama. Individual mortgage agreements and lender policies may have slight variations, so it is recommended to consult with your specific lender for precise details related to your mortgage and escrow account. Additionally, staying informed about any changes in property tax rates and regulations in your county is essential.

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by romaine , 6 months ago

@ronaldo_von In Alabama, property taxes are assessed and collected by local county governments. Homeowners with mortgages typically pay property taxes as part of their overall housing expenses. Here's how property taxes generally work for homeowners with mortgages in Alabama:


  1. Property Tax Assessment: County tax assessors determine the value of a property for tax purposes. The assessed value is used to calculate property taxes. Assessments in Alabama are based on a percentage of the property's fair market value, and this percentage can vary by county.
  2. Property Tax Bills: Property tax bills are usually issued annually by the county tax collector's office. The tax bill will detail the assessed value of the property, the applicable tax rate, and the amount owed for property taxes.
  3. Escrow Accounts: Many homeowners with mortgages have an escrow account set up by their mortgage lender. A portion of the monthly mortgage payment is allocated to this escrow account to cover property taxes and homeowners insurance. The lender then pays these bills on behalf of the homeowner when they come due.
  4. Mortgage Payments: Homeowners with mortgages typically see property taxes incorporated into their monthly mortgage payments if they have an escrow account. The lender collects funds for property taxes along with the mortgage principal and interest, holding them in the escrow account until the tax bills are due.
  5. Homestead Exemption: Alabama offers a homestead exemption, which can provide eligible homeowners with a reduction in property taxes on their primary residence. This exemption can help lower the overall property tax burden for qualified homeowners.


It's important for homeowners to review their property tax assessments annually to ensure accuracy and to take advantage of any available exemptions or deductions that may help reduce their property tax liabilities. Failure to pay property taxes in Alabama can lead to penalties, interest, and potentially the loss of the property through tax foreclosure.

Homeowners should consult with local tax authorities or a tax professional for specific details regarding property tax rates, assessment procedures, exemptions, and payment deadlines in their particular Alabama county.