Are you considering buying your first home in North Texas? Owning your own piece of real estate is a liberating experience and one that will provide you with the foundation to build your personal wealth and equity. It is important to consider the financial ramifications. Once you acquire your own home you will be responsible for a variety of new costs, including property taxes which are assessed by your local government to pay for municipal services. In this blog post we’ll share how property taxes work and what you can expect to pay when you buy your new home.
It All Begins with a Local Property Tax Assessment As mentioned above, local governments assess property taxes as a means for paying for police officers, fire fighting services, road maintenance and the other various costs that come with running a town or city. Whether you’re buying a house, a townhouse or a condo, the property that your home sits on is inside of an area known as an “assessment area”. When the local government determines what your local tax levy or tax rate will be, they will assess your home based on the real estate market value of similar homes in the area. You can multiply your tax rate by the assessed value of your home to determine how much you’ll owe in property tax.
Property Taxes as Part of Your Closing Costs When you close on your new home you’ll have to pay property taxes, and your real estate agent will help you to understand how much these taxes will be and how they will be paid. In most cities like McKinney and counties like Collin County, you’ll pay a pro-rated amount of property tax that covers the time span from the date you purchase the home until the end of the year, after which time you’ll be paying your full assessed rate. The exact numbers will be dependent upon the property tax rate along with the value of your home.
Don’t Forget Your Overall Tax Picture Finally, don’t forget that property taxes can be factored in to the rest of your overall tax picture. Check with your accountant or another financial professional to determine your options regarding property taxes that may save you some additional money. There are numerous tax benefits to owning a home, so it’s best to start using them from day one. As with all other taxes, property taxes are a fact of life that every homeowner faces. Becoming a first time homeowner can be both an exciting and stressful time. With that in mind, the more knowledgeable you can become on the various aspects of home ownership, the more prepared you will be to make the best financial decisions going forward.
SEVEN TIPS FOR TEXANS
Save on homeowners insurance Here are seven ways to cut the cost of your home insurance from helpinsure.com, a Texas consumer-friendly website:
Shop around – and do it early! Check with several different home insurance companies to get rate quotes. (An independent insurance agent can provide rate quotes from a variety of companies.) And definitely do it well before your policy expires, just in case you run into any snags along the way.
Raise your deductible The deductible is the amount of money you have to pay toward a loss before your insurance kicks in. Home insurance deductibles usually start around $250. However, if you increase your deductible to:
Buy your home and auto policies from the same company Many companies will give what’s called a “multi-line” discount if you buy both home insurance and auto coverage from them.
Don’t skimp when buying a home If you’re looking at buying a home, think, about the cost 0f insuring the home. A newer home’s electrical, heating, and plumbing systems and overall structure are likely to be in better condition than those of an older home – and can lead to a discount on your premiums.
Insure your home, not the land While your home and its contents are at risk from fire, theft, windstorms, and other perils, the land your home sits on is not. Don’t include the value of the land in deciding how much home insurance you need to buy.
Improve security and safety Items such as dead-bolt locks, burglar alarms, and smoke detectors can usually bring discounts of 5% each. Your insurance company may also offer a significant discount of 15% or sometimes even 20% if you install a sophisticated home-security system.
Check your policy annually Your policy should reflect the value of your home and belongings. If you review your policy every year, you can easily make the necessary adjustments. If, for example, you just sold a valuable painting, you won’t need the same amount of personal property coverage. But if you added a garage or other addition, you’ll need to increase your coverage.