Know before you owe

It’s important to have a monthly housing budget in mind when you shop for a new home. The on-line calculators you see on web sites are interesting, but don’t account for everything that might be included in your monthly payment.

We’re finding surprises these days in the property tax portion of new house payments. Municipalities often have “extra” taxes for any given area, in the form of bond measures for hospitals, schools, or sanitation.

Generally, you can guess that your new annual property tax bill will be around 1.25% of your acquisition price. If you’re buying a $250,000 house, that would mean paying about $260/month as the tax portion.

But is that all? For example, a review of a recent Bear Valley Springs property tax detail shows an additional $886.41 in extra assessments, which equates to about $74/month more in your house payment. Your local lenders know about this and will tell you upfront to include this amount in your housing budget. If you’re using an out-of-area or online lender, they wouldn’t know to tell you. It takes awhile for the tax bump to find its way into your impound account, so when your payment increases a few months into your new mortgage, you don’t want that to be a surprise.

In the above example, if you quit buying Starbucks coffee every day, you’d about make up the difference. What if you were buying in a whole new area and you didn’t know to ask about tax bumps?

We’re in a transaction now in another county where the property tax extras come to $2931/year. That’s a whopping $244/month more in monthly payment. At that level, not only is your budget in trouble, but your loan approval may no longer work due to debt ratios.

Where does a savvy consumer find this information? Your local Realtor would know to tell you upfront, before you shop any given neighborhood. Once you’re in the transaction, your Natural Hazard Disclosure Report breaks out details of the subject property tax bill.

Be sure you are working with knowledgeable professionals when you decide to buy a house. We’re able to guide you from the beginning to properly set your expectation about your monthly expense after escrow closes.

Tammy Engel is your local Mortgage Advisor, and has been voted “Best Of” in a local poll since 2012. Contact her at 661/822-7325 for purchase, refinance, and reverse mortgage./i>