When you are looking at homes to purchase most people are tying to stay within a certain budget. They have arrived at a price they are comfortable with; that price is based on the monthly payment that they have been estimated for. There is one large variable that has dramatically changed the wya people look at the process though....
Foreclosures and short sales have lowered the prices well below tax value. Now, that house you are looking at for $120,000 has a tax value of $180,000 (based on the last time it was evaluated). That extra $60,000 in tax value can change your payment $50-$60 a month more.
The problem is when you figure out the price range you want to look at; the system does not knwo the tax value yet (becuase you do not have a house). So, it estiamtes taxes based on the tax value being equivalent to the sale price.
So, if the house you are looking at has a signifcantly lower tax value; then chances are your payment will be lower. The same goes true in the other direction as well. And becuase your taxes are divided over a twelve month period the small amount can add a large sum to your monthy payment.
I had two clients purchasing homes in the same price range. In fact, after negotiations they were less than $1000.00 apart in sale price. With comparable interest rates and down payment one is paying over $80.00 a month more than the other. The reason is the proerty taxes on their house was signifcantly higher than the sale price of the house while the other home property tax was close to the sale price.
So, if you are looking at homes, and considering placing an offer on a home....check what the taxes are for the year. Make sure they line up with what you were budgeting in for. The last thing you want is to arrive at the closing table and find out your monthly payment is signifcantly higher than you thought; becuase of the property taxes....
Dave diCecco
Realtor/Broker
www.davedicecco.com
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