Property taxes are charged by city and county governments based on your home's assessed value. Rates vary wildly — under 0.5% of value in some states, over 2% in others. In Texas and Illinois, property taxes can rival mortgage payments themselves.
If you escrow, the lender collects 1/12 of the annual tax with each mortgage payment and pays the county on your behalf. If you don't escrow, you pay twice a year (or quarterly in some states) directly.
Many states offer homestead exemptions, senior exemptions, or disability exemptions that lower the taxable value. Always check what exemptions you qualify for after closing — they can save you thousands per year.