This First Time Home Buyers article discusses What makes up a house payment in Frisco TX. In the most simple form of understanding what makes up a house payment:
House Payment = Principle + Interest + Property Taxes + Hazard Insurance +
Mortgage Insurance (if applicable) + HOA Dues (if applicable)
Most home buyers purchase their home through mortgage financing. Hence, the house repayment typically constitute principle and interest payments.
Principle - Each mortgage monthly payment is dedicated to repaying the principle loan amount.
Interest - Interests is repaid based on the term of the loan and the interest rate.
Note: Interest rates quoted on most websites are for borrowers with excellent credit, 2-year verifiable employment history including tax returns (salaried or self-employed) and good payment history. The interest rates may adjust based on the borrower's credit and other deciding factors.
Property Taxes - Property taxes here in Texas is determined by the local county tax appraisal district. For Frisco TX, depending on which county your home is located, the jurisdiction over your property taxes and values could be Collin County or Denton County.
Property Taxes in Frisco TX is made up of school taxes (depending on school district), City of Frisco taxes, County taxes (Collin or Denton depending) and community college. As an estimate, you could figure a 2.5% - 3% property tax payment based on the sales price. However, you must read about the myths behind tax assessment versus market values. It has been considered that the property taxes are considered "high" in Texas. However, Texas does not have state income tax.
As an example #1: Let's assume that the tax assessment was $100,000 and the property taxes was 2.5%.
If the property is not a primary residence (Texas homestead), you would pay $100,000 x 2.5% = $2,500 per year or $208.33 per month for property taxes.
If the property is a Texas homestead, you will qualify for a Homestead exemption ie $15,000 break from your property taxes for your school taxes.
As an example #2: Your property is valued at $100,000. The property taxes was made up of 1.5% school taxes and 1% on the others.
Your property taxes with homestead exemption will be = ($100,000 - $15,000) x 1.5% + ($100,000 x 1%) = $2,275 per year or $189.58 per month.
Note: You only get an exemption from your school taxes. There are also other exemptions that may apply: Disability, Over 65, and Over-55 surviving spouse of a person who received the Over-65 exemption.
Hazard Insurance - Hazard Insurance must be carried at all times and it is required by the lender. Hazard insurance protects you and the lender in the event of fire, storms, theft and other events as stated in your policy. Your lender must review your policy to make sure you have adequate coverage before they approve your final loan. There is not an estimated figure to provide since the premiums vary.
The first place to receive a quote would be with your auto policy. Most insurance companies give additional discounts if the auto and home are insured by the same company. Hence, it *may be cheaper for both your vehicles and home policies.
Mortgage Insurance - If you do not put 20% down payment on your loan, you are required to pay for mortgage insurance. In a conventional loan setting, it is called a Private Mortgage insurance. In an FHA loan, it is called FHA Mortgage Insurance. They both have the same objective. This insurance premium is paid by the borrower (you) to protect the lender in case you default on your loan.
HOA Dues - Some properties are located in a mandatory homeowners' association. The homeowners' associations regulate the common areas, landscaping, architectural improvements on properties. You must be a member of the homeowners association in order to live in a community with mandatory HOA. There are "rules" and "bylaws" to follow in such communities. Hence, you must read the Homeowners Rules, Regulations and Bylaws very carefully. In Frisco TX, most communities that do not have a community pool usually charge about $200 - $300 per year for HOA dues. In communities with communities pools, they could run about $400-$600 per year and communities with elaborate community amenities such as Lone Star Ranch could be over $800/year. Gated communities in Frisco TX usually cost over $1,200 and some as high as $2,500-$4,000 in higher end neighborhoods such as Starwood and Stonebriar. The roads within a gated community is considered private property of the community. Hence, it is not serviced by the City. That is also the reason why the gated communities have higher than normal HOA dues along with hiring 24-hour guards.
Summing all of this up, mathematically - if you purchased a $100,000 first time home in Frisco TX and your interest rate was 5% with a 20% down on a 30-year mortgage, your monthly payment would be =
House Payment per month
Principle + Interest = $536.82
Property Tax = $189.58 (General Homestead exemption)
Insurance = $75 (Estimated)
HOA Dues = $30 (Assume $360/year)
Total Payment = $831 per month
Stay tuned for the next part of this Frisco TX first time home buyer series: How much funds are needed to buy a house in Frisco TX.
Articles in the Frisco Texas First Time Home Buyer series:
Related Articles:
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Frisco TX First Time Home Buyers - What Makes Up a House Payment in Frisco TX (Part 3).
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Great information! The "payment calculators" online often only include principle and interest, which can be a little misleading.