You may have wondered if your property taxes or
homeowners insurance will be affected by taking out a new home
equity loan or refinancing your mortgage.
Your property taxes are based on the county assessors
valuation of your home, and will not change if you decide to
place a new loan on your home. When the lender requires an appraisal, it is used for the purpose of
determining market value and the processing of your loan. The
appraisal is not submitted to the county for making any
adjustment of the property value, or tax base.
Likewise, your homeowners insurance is based on the replacement value
of your home, and is not normally affected by how much financing you
have on your home, so adding a home equity loan or refinancing
the mortgage should not require any increase in the insurance coverage.
In processing your loan, the lender will ask for a copy of
your current policy to make sure your home has sufficient
hazard insurance to cover the financing, including the new home
loan. Also, if your home is determined to be in a flood zone,
your policy will need to include flood