The question was, "If I buy a home how much will my taxes and insurance be?"
Actually there could be expenses other than these that could be added to a mortgage loan;
HOA - Home Owner Association. Many times there is an HOA in what does not look like a condo or town home. In Milpitas is a tract called The Pines and homes in that tract have a small HOA each year because there are tennis courts, parks, and walk ways to maintain.
PMI - Private Mortgage Insurance. Most lenders require private mortgage insurance (PMI) for loans with loan-to-value (LTV) percentages in excess of 80% (the buyer put down less than 20% of the home's value upon purchase). PMI can be very expensive and if possible it is usually best to put a second mortgage in place to avoid the PMI cost.
A Mello-Roos District is an area where a special tax is imposed on those real property owners within a Community Facilities District. This district has chosen to seek public financing through the sale of bonds for the purpose of financing certain public improvements and services. I don't think we have any Mello-Roos areas in the Bay Area; they are normally in developing areas. Again, it is important to know up front if there is a Mello- Roos tax.
Back to the question. How much will my taxes and insurance be? The industry uses a formula to compute these. The formula will be close but not exact especially regarding the property taxes. The industry uses a formula of 1.25% of the purchase price or ..0125. If the purchase is $700,000 then the monthly tax will be 700,000 x .0125 = $8,750 divided by 12 to come to $729 each month. The industry uses 1.25% but I have seen area where the tax is as high as 1.39%. Ask your Realtor to check County records to make sure there are not special taxes that you may not know about.
Insurance - Another formula. The Property tax is 1.25% of the purchase price and the insurance is .0025 of the loan amount. A $600,000 loan x .0025 = $125 each month. This is a cost that can be shopped for and actually I never see the cost as high as we compute it for the loan. Even if your cost is 1/2 cost that is used by the bank underwriter - they will not use that cost. The cost based on the formula will be used. In a nutshell: Make sure you know all the associated monthly loan cost and the taxes are based on 1.25% of the purchase price and the insurance is based on .25% of the loan amount.
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