Home Affordability is MUCH More Than the Price. Check the Taxes and Insurance, too

There's much more to determining a home's affordability than just its asking price. There are two VERY important additional factors to consider.

Property Taxes:

You would be very surprised  at the varying tax assessments and annual property taxes  for homes within the same town, in the same general price range, and having similar features. Sound like it's a minor item? It's not. Here are a few examples that were taken from our MLS.

One home is 1.3 million with annual taxes over $20,400, and another is 1.4 million with taxes of  approximately $12,600.   Both are similar, but the home for 1.4 million is actually cheaper to own than the home that is priced one hundred thousand dollars less.

As a matter of fact, if you calculate  the difference that just those taxes made on a monthly payment, you could actually have an additional buying power of  nearly $150,000  just because of the property tax differential.

Having an additional $150,000 in buying power is quite substantial. And even though these properties are over one million, it's still a lot of  money in your pocket (or out of your pocket, depending on which way you look at it)

It's not just because the price is over one million, either.  Here's another  comparison of two inexpensive homes- One priced at $220,000 with annual property taxes of $9100, and another priced at $250,000 with annual taxes of just over $5200 per year. You probably guessed it already- The $250,000 home iso ver $100 per month CHEAPER to own than the house that is listed for $30,000 dollars less. Now go ahead and add roughly $25,000 due to the difference in monthly payment due to the property  taxes, and your buying power for that situation coud be increased by over $50,000.

I did not have to look too hard to find these examples. In fact, it took me less than ten minutes. This is every "where", and in every town.  If we were to start comparing prices in different towns along with their respective tax rates, it would even take it to another level. Bottom line-  LOOK AT THE TAXES ON THOSE LISTINGS. It could mean the difference between you getting a nice house and an outstanding home and for NO ADDITIONAL MONTHLY COST.

Home Insurance Premiums:

Also make sure to look into the Insurance Premiumsfor that home as well. Home insurance is a necessary add-on. Necessary for your mortgage, and necessary for your investment, even if you will own the home free and clear.  Certain homes will require additional insurance that can be costly. For example, if you like the beach and want to live close to the water, you probably already know that Flood Insurance will be required from your lender, and are most certainly prepared to pay the additonal premium, which can run into thousands (yes, thousands) of dollars a year more than just a basic homeowner policy.

What you may not know is that if your proposed home sits  999 feet from the water, you may still have to pay a very large premium, even if you are not direct waterfront.  The last time I checked, 1000 feet was the cut off point.  Here's another thought on Flood Insurance. You don't have to live within 1000 feet of Long Island Sound to have the requirement to purchase Flood Insurance. There are lower lying areas in the most unheard of places in town that will require some form of additional insurance as well.

If you were unaware of the excessive variations that do occur in every town and in every price range, and how it can affects your bottom line, call me. I'll find you a great house, "do the math" and save you A LOT OF money.

If you have a question about buying or selling Real Estate in Fairfield County, and are in need of representation, I invite you to contact me, and if you have an idea for a topic that you would like to see on The CT Realty Blog, please include it in the "Post a Comment" section link below this post. We appreciate the feedback and look forward to providing you with the best real estate content, advice and service in Fairfield County, Connecticut.

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Comments

[Gerard Brightman]

I certainly agree. Home insurance is really essential especially with your investment.