New homebuyers across Ohio are experiencing sticker shock when they receive their latest annual mortgage coupons. Monthly mortgage payments are increasing significantly for many homeowners, resulting in increased fear, anxiety, and frustration. This may be even more of a reality for those that bought their new home during the pandemic homebuying frenzy.
Property taxes are a leading cause of increases in homeowner’s mortgage payments.
During the pandemic, home prices saw a significant increase due to a rise in demand; many found themselves in bidding wars that put them in a position of paying more for their new home than they had planned. Property values for those newly purchased homes adjusted to the purchase price during the 2024 sexennial appraisal. In many cases, the documented value of the home at the time of purchase was well below the amount paid for the home. In these instances, the property taxes at the time of purchase were based on the old value; however, once the new value was assessed, homeowners saw a steep jump in their mortgage payments as lenders balanced borrower’s property tax escrow.
Compound the unprecedented increase in home values with skyrocketing property insurance rates, and the recent passing of historically large levies, many homeowners are seeing their housing costs go through the roof.
The few things we can do when working with potential new homebuyers to help them understand and prepare for these fluctuations are:
- Recommend that they check the Cuyahoga County MyPlace or Summit County PropertyAccess website to find the current property value and annual taxes. If the new purchase price is higher than the current value, taxes may go up during the next triennial or sexennial appraisal.
- Buyers can request/ demand that their mortgage payments be calculated with a tax rate equivalent to the purchase price and not certified value.
- If the building/structure has a current value of $0, there could be a tax abatement in place; they will want to call the city building department to see when the abatement expires.
- Look to see if the property is currently receiving the Homestead Exemption; if the new buyers do not qualify for Homestead, they will see an increase in property taxes
- Recommend that they do their research and see if there are any levies on the upcoming ballot and/or the cities track record for passing levies. Many counties will have a levy estimator on their Fiscal Office website to estimate what the impact of a levy will be on property taxes.
- If purchasing a fixer-upper, let them know that home improvement permits will affect the future value of their property and potentially the property taxes.
This is a message from the Cuyahoga County Treasurer’s office.
