Home Mortgage Loans

Property Taxes and Insurance

   
   

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 insurance.