Buying a home can be a dream come true for many individuals, but the reality of homeownership often comes with some unexpected financial burdens. In a recent survey by Real Estate Witch, it was found that nearly three-quarters of new homeowners experienced regret about their purchase. Surprisingly, one of the main sources of dissatisfaction among these new homeowners was property taxes, catching 33% of them off guard.
When it comes to purchasing a newly built home, the situation can be even more complex. Unlike existing homes, new builds lack a tax bill due to the absence of a house to assess. Instead, mortgage lenders typically use either an older tax rate from the area or an estimated tax rate to calculate the owner’s monthly payment. This can lead to significant discrepancies between the expected and actual property tax rates, causing financial strain on already tight budgets.
Initially, homeowners are usually required to pay the estimated property tax rate into an escrow account. However, as the county office reassesses the value of the new house, the homeowner may discover that they owe more in property taxes than anticipated. In such cases, if the homeowner cannot afford to pay the additional taxes in a lump sum, the lender often covers the shortfall. The homeowner then repays the lender through an increased mortgage payment, adding to their overall housing expenses.
To avoid falling victim to unexpected property tax hikes, potential homebuyers are advised to conduct thorough research before making a purchase. It is essential to understand how property taxes are reassessed in the area and what factors may influence the reassessment process. Seeking guidance from local loan officers and real estate experts can provide valuable insights into the financial implications of buying a newly built home.
While it may be tempting to rely on online resources to estimate future property taxes, it is crucial to exercise caution. The taxes listed for a property online are often based on the current owner’s payments and may not reflect the actual amount you will owe. Consulting with professionals and researching the local real estate market can help you make informed decisions and avoid financial surprises down the line.
The allure of a newly built home can be enticing, but it is essential to be aware of the potential pitfalls that come with it. By understanding the intricacies of property tax assessments and being proactive in planning for future expenses, homeowners can avoid costly surprises and enjoy their investment with peace of mind.