For most of us, buying a home is the biggest financial decision we take in our lives, ever. However, that decision also involves paying property taxes. That is the reason it is very important when you are planning to buy a home, to go for one that you can afford.
Many people when they are planning to buy a home calculate all the payments they need to make from mortgage, to interest to fees. Unfortunately, most people forget to add a very important amount to this calculation and that is property taxes. It has been seen that property taxes can be very high and this requires a lot of budgeting. If you are in a situation where you are just about managing to pay your mortgage, then you would be in for a nasty surprise when the time comes to pay property taxes. You will just not have enough money as most property taxes have to be paid once or twice a year and that amount has to be paid in a lump sum.
Property taxes varies from place to place because it is determined by counties. The state law sets a cap on property taxes but ultimately it is the county that decides the amount. Property taxes are usually one to two percent of the total sales price of a home. This means that if the property tax in one county is one percent and you buy your home for $600,000, you would have to pay $6,000, and if the property tax is two percent, you would end up paying $12,000 for the same house. Therefore, before you purchase a home, it is important that you get know what the property taxes are for that area.
There are many people who do not take into account the property taxes when calculating their mortgage payments and as a result lenders are known to force borrowers to plan for property taxes. This forced planning is not required, however, if the borrower put down twenty percent of the price.
Buying a home is a dream that everyone wants to fulfill. Unfortunately many people forget to do the financial planning and most forget to take property taxes into account if they do.
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