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Avoid The Shock of Property Taxes


When buying  a home, especially your first home, there is one big factor to take in to consideration before placing an offer.

The BIG factor is property taxes. Not many people discuss property taxes, especially when browsing for homes. However, this factor can really increase your monthly payment if you are not careful.

When you are working with a mortgage broker and your realtor, discuss with them what your ideal monthly payment with EVERYTHING combined.

This meaning, not just the principal and interest, but also the hazard insurance, taxes and HOA fee if applicable.

These factors all add up to your total monthly payment. Here’s an example of how you could be affected by property taxes:

Let’s say you have a budget of only having a $1,500 house payment including taxes and hazard insurance. Well with taxes (about 1.5% = $200/month), the house that you could afford would be approximately $200,000 with a 3.5% down payment. This would give you a $1,500 house payment with everything combined.

Now the opposite example would be buying  a home without the concern of property taxes included. To get a $1,500 house payment you could afford a home in the range of $250,000. That’s a big difference, but once you receive your property tax bill, your monthly payment could jump up to about $1,800 on the low end.

The main goal of this example is to provide wisdom to the buyers, especially first time buyers, to be aware of what makes up your total mortgage payment. Ask questions during the process and ask about property taxes. You don’t want to move into your new home, just to find out your monthly payment is nothing you expected, or worse yet, prepared for.