Do you still pay property tax after your house is paid off?

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Yes, you still need to pay your property tax after your house is paid off. You will also need to pay homeowners insurance directly as well. While you will still need to allocate funds towards property taxes and home insurance, keep in mind the impact your escrow account has on your payments.

There are two important things to remember with the escrow account:

  1. Once your mortgage is paid off, there may be a remaining balance in your escrow account. Your lender will mail you a check for the balance of the escrow account.
  2. If you have utilized an escrow account to pay your taxes and insurance, you will need to remember to pay your taxes and insurance directly moving forward.

When it comes to your taxes, you will need to get set up to pay your local municipality directly. When it comes to your homeowner’s insurance, connect with your insurance provider, and make sure to move the payment account away from your lender’s and attach it to your account.

While you will still need to pay your taxes and insurance after you have paid off your mortgage, you have also just freed up budget that can now be allocated towards other expenses but be sure to have a plan when it comes to allocating these funds.

WATCH: HOW TAXES IMPACT YOUR MORTGAGE

Do You Still Pay Property Tax After House Is Paid Off Mortgage FAQ Omega Lending2

Reallocating Your Mortgage Budget

Now that your home is paid off, you have some things to consider when it comes to how you reallocate these funds. Since many utilize escrow accounts, you will now be responsible for paying your property taxes and insurance directly. But the extra monthly budget that once went to your mortgage is now only a fraction of that and you have some choices to make.

There are many options with how you spend or invest those dollars, but here are a few ideas to consider:

  • Pay Off Debt: Now that the biggest debt is paid, you might as well get rid of all of your other debts as quickly as possible. Take your extra funds and put them towards paying off any other high interest debts.
  • Emergency Funds: Save the extra cash for an emergency. You never know what life could throw at you and now you can grow a sizeable emergency fund just in case.
  • Retirement Savings: Typically, those who have paid off their home are older in age, although this isn’t always the case. However old you are, putting more towards your retirement is a great option for these funds.
  • Invest: There are many investing opportunities. From high risk to conservative, consider investing your money so you can help it grow. A financial advisor could help you along this path.