Taxing Times: Navigating the Property Tax Puzzle of New Homes!

June 21, 2024 | Read Online

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Hey, Future Homeowners!

Moving into your brand-new home should be exciting, but it's becoming stressful for many people because of unexpected costs like property taxes.

A 2023 Real Estate survey showed that almost three-quarters of new homeowners regret buying their house because of these surprise costs.

TAXSMART
New Homeowners Beware: The Hidden Property Tax Surprise Waiting for You!

3-minute read

Expect Surprises with Property Taxes

When you buy a brand-new home, the first property tax amount you're told is just an estimate. Many new homeowners need to learn that this amount can jump up a lot after the home is assessed for the first time. This tax increase can surprise you and increase your finances if you already spend a lot on your budget.

As new homes are becoming more popular, now making up about 30% of all homes sold—up from the usual 10% to 20%—this issue could affect many of you. Melissa Cohn from William Raveis Mortgage states, "Real estate taxes can change yearly, and homeowners don't have much control over these changes."

The Real Deal on Property Taxes with New Construction Homes

Why Do Property Taxes Increase on New Homes?

Brian Nevins from Bay Equity mentions that lenders often guess your property taxes by taking 1% to 2% of the home's sale price or using other methods based on the local tax rates. They put this estimated tax money into an account called escrow, which might seem like it should be enough, but sometimes it's something else.

After a while, your local county will assess your new home and set the actual tax rate, which might be higher than initially estimated. If the money in your escrow account isn't enough to cover this new tax rate, your lender must pay the extra amount. But here's the catch: your monthly mortgage payments will increase to cover these additional costs.

How to Avoid Unexpected Property Tax Costs

Don't let property taxes spoil the fun of getting a new home. Here's how you can stay ahead:

Learn About Tax Changes: Melissa Cohn recommends determining how often your new area reevaluates taxes and what factors they look at.

Talk to Local Experts: Speak with a loan officer who knows your area well. They can give you valuable advice on what you might expect to pay in taxes later.

Look at Older Homes in the Area: Veronica Fuentes from Northwestern Mutual suggests checking out homes in your chosen neighborhood that have been there for at least a year. But remember, the tax amounts you find online might differ from what you will pay.

Keep in mind that the tax rate you see when you buy your new home probably won't stay the same—it will likely go up. So, plan your budget with these potential increases in mind to prevent any surprises.

Want to learn more? Click [HERE] to explore more tax information and make your home-buying experience even better!

Stay savvy and tax-smart,
Your Real Estate News Navigator

P.S Remember, fixing small problems early can prevent bigger ones later. In the world of property taxes, doing a bit of research can save you money! Visit our site for helpful financial tips.

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