Archive for January 17, 2012

Did You Consider Property Taxes When Choosing Your Home?

There are many things to consider when buying your first home.  Property taxes are definitely one of those things.  They are one of the four items in PITI (Principal, Interest, Taxes and Insurance) that make up your monthly mortgage payment.  Depending on your down payment amount, mortgage insurance may also be added to this equation, but we’ll save that for another post.

Because property taxes make up a good portion of your payment, you’ll want to keep an eye on how they may vary from property to property.  It’s good practice to make sure your loan originator is giving you an estimated payment breakdown, including the property taxes listed separately. The loan originator can’t know for sure up front what your exact monthlyproperty taxes will be, so they give their best guesstimate.  If you know a specific property’s taxes you can substitute them in for your ballpark figure and have a more accurate idea of how it will affect your overall payment.

Another good reason to keep an eye on property taxes from property to property is to see how they vary across different neighborhoods.  If you’re looking for a two bedroom house in a very specific neighborhood like Green Lake, you may not see much variance.  This is because property taxes are calculated in relation to the property value.  So if all the homes you’re looking at are around the same value, chances are the taxes will be similar as well.  However, if you are considering buying in several different areas or even different cities, it is possible that you could see quite a bit of variance.

Say for instance, you were looking for a two bedroom house in either North Seattle or Shoreline. You could find two very similar houses within a couple blocks of each other that could have drastically different taxes.  This is due to the fact that Shoreline’s tax multiplier is quite a bit higher than Seattle’s.  The flip side of higher property taxes may often be better infrastructure.  So you may not mind paying higher property taxes, if it means better schools, roads and public transportation.  However, if you don’t have children and tend to walk everywhere, maybe you aren’t as concerned with infrastructure as someone who does.  Everyone’s specific scenario is different.  The point is, to make sure that you’re making a decision that best fits yours.  If you are buying your first home, and looking to gather more information to make an informed decision, please go to our Calendar/Reservations page and sign up for one of our FREE workshops.