The Homeowner’s Guide to Property Taxes and Home Insurance

So, you’re buying a home—or maybe you just bought one—and suddenly you’re hearing terms like escrow, assessed value, mill rate, and dwelling coverage more than you’d like. If you’ve found yourself wondering, “What even are property taxes?” or “Do I really need home insurance?”—you’re not alone.

This guide breaks it all down in plain English, with helpful tips and local recommendations, so you can feel more confident as a homeowner. Whether you’re looking to budget wisely, avoid surprises, or just impress your realtor at the closing table, we’ve got you covered.

Let’s Start with Property Taxes

What Are Property Taxes, Really?

At their core, property taxes are what you pay your local government for the privilege of owning a piece of land (with or without a home on it). These taxes fund public services like:

Your local schools
Police, fire, and EMS
Libraries and parks
Roads and community infrastructure

Basically, they keep your town running.

How Are Property Taxes Calculated?

Property taxes = Assessed value of your home × Local tax rate (aka mill rate)

Example:

If your home is assessed at $250,000 and your local tax rate is 1.8%, you’d pay:

$250,000 × 0.018 = $4,500 annually

Keep in mind:

Rates vary by county and municipality
Assessments may not reflect market value
Your taxes may be due once or twice a year, depending on where you live

How to Find Out Property Taxes on a Home

Looking at a house? You can look up the property taxes online through your county assessor’s website or your local municipality’s website.

If you’re in Jefferson County or Dane County, try these tools:

When in doubt, ask your real estate agent or loan officer. At Farmers & Merchants State Bank, we’re happy to walk you through tax estimates during the buying process.

Why Do Property Taxes Change?

There are a few reasons why your bill might go up or down:

Your home gets reassessed
Local levies or referendums pass (like school improvements)
Your community’s mill rate changes

Pro tip: If you think your assessment is too high, you can often appeal it with your local assessor’s office.

What’s an Escrow Account—and Why It Matters

Many homeowners pay property taxes through an escrow account. Here’s how it works:

Each month, your mortgage payment includes an amount for property taxes and home insurance
That money goes into your escrow
Your lender (like us at F&M) uses that account to pay those bills when they’re due

Why it’s helpful:

You don’t have to save for large lump-sum payments
You won’t miss a deadline by accident
Budgeting becomes more predictable

Home Insurance: Your Home’s Safety Net

Okay, now that we’ve tackled taxes, let’s talk home insurance. It may not be as fun as designing your kitchen island, but it’s one of the most important things you’ll ever buy as a homeowner.

Do I Really Need It?

Short answer: Yes.

Even if you own your home outright, skipping homeowners insurance is a huge risk. And if you’re financing with a mortgage, your lender will require it.

What Does Homeowners Insurance Cover?

Policies vary, but most standard policies include:

Dwelling Coverage – Repairs to your home from fire, wind, etc.
Personal Property – Furniture, clothes, electronics, etc.
Liability Protection – If someone is injured on your property
Loss of Use – Temporary housing if your home becomes uninhabitable

Bonus tip: You can also add extra coverage for things like water backup, valuable jewelry, or special structures like sheds and garages.

Local Insurance Providers We Trust

Looking for a great local agent who understands our community? We proudly recommend:

Amy Winkelman – American Family Insurance
Meet Amy Winkelman
Amy is based in Lake Mills and can help you understand your options based on your home and budget.
Contact Info: (920) 648-3141 | Email Contact Form
Service Insurance Agency
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With personalized service and trusted expertise, their agents help local homeowners find the right protection.
Contact Info: (920) 478-2585 | [email protected]
Meg Cano-Schuman – State Farm (Madison)
Visit Meg’s Website
Serving the greater Madison area, Meg and her team offer everything from home to auto insurance with a local touch.
Contact Info: (608) 238-2000 | Email Contact Form

Smart Homeowner Tips: Taxes + Insurance Edition

Check your tax assessment every year – Mistakes happen!
Shop insurance rates regularly – Coverage needs can change as your home does
Ask about bundling – You could save by combining auto + home
Keep receipts for upgrades – They may affect your home’s value or insurability
Use our mortgage calculator – to estimate your full monthly costs with taxes + insurance included

The Homeowner’s Guide to Property Taxes and Home Insurance: What to Know Before (and After) You Buy