3 Cautions for Homebuyers

As people are buying homes, there are three cautions that I will offer.

Know the true tax situation.

Taxes are based on the assessed value of the home.  The assessed value is based on the market value of the home.  The market value is determined by what someone pays for it.  If a family has lived in a home for 30 years and decides to sell their house, their taxes are based on what they bought the house for 30 years ago.  The mortgage company may use that tax amount to determine how much they need to collect from you each month so they can pay the tax bill when it comes due.

As an example, let’s say a family has taxes of $2400 a year.  The mortgage company will collect $200 monthly to pay the tax bill.  However, your new taxes will be based on what you paid for the house.  For this example, let’s say the new tax bill is $7,400.  In most cases, the mortgage company will pay the $7,400 but will come back to you for the $5,000 difference.  You can either pay the difference in a lump sum or pay that amount over the next year, approximately $400 a month.  In addition, your monthly payment will go up another $600 a month so the mortgage company has enough money to pay the tax bill the following year.

Buyers can look at the county property appraiser’s website to find the estimated tax.  For Hillsborough County, there is a link on the front page.  Enter the property address and purchase price and it will give you the estimated taxes.

Also, if this will be your primary residence, because sure to apply for homestead exemption as it caps the amount the assessed value can go up each year.

Know the true cost of operating the home

When considering what the home costs, some homeowners look at the PITI (principal, interest, taxes and insurance).  However, there are other costs associated with owning the house.  The family needs to account for electric cost, utilities, cable, internet and maybe pool/lawn maintenance.  I would also suggest factoring in the transportation cost.  You can buy a larger home in the suburbs, but what is the cost of commuting each day in both gas and time?

Consider the re-sell factor

A house is an asset.  Assets are bought and sold.  When buying a house, consider the re-sell factor.  Over the past two years, houses were selling quickly and buyers were making quick decisions.  As the market has slowed down, buyers are getting more discriminating in their choice.

When buying a house you want to consider if it is near major highways, railroads, alligator filled ponds.  What are the schools like?  What is the neighborhood like?

You will want to know why the house is attractive to you and why it would be attractive to new buyers.

If you are looking to buy or sell your home in the Tampa area, reach out to me.  Let’s sit down and talk to see how I can best serve you.

Joe Brown

joebrown@c21be.com