How Important Are Real Estate Taxes In Buying A Home?
Lenders use PITI (principal, interest, taxes and insurance) along with other debt to determine how much someone qualifies to buy. It is easy enough to calculate the principal and interest payment on any one of the online tools available. My web page www.dagriffinfinancial.com has such a tool. This is important information but only part of the total the lender uses to qualify a home buyer.
One facet of the payment, the real estate property taxes, can matter to some folks as to the home they buy. I know of some who insist they only want to buy in a more rural area because taxes are lower there, county only taxes vs city and county in other areas. Higher taxes can affect the buying power of someone who is borderline in what he/she can afford. So this is one important reason to consider the real estate taxes.
Assuming the real estate taxes are not a deterrent due to limiting purchasing power then consider what you get for the higher taxes. Higher taxes tend to be in cities that provide more services be it a paid fire department or higher ranking schools for instance. A higher tax area may have a greater impact on how fast equity builds due to the services or schools for instance.
The bottom line is that when buying a home take a look at the taxes and make sure you are aware of what you'll be paying but don't make a decision solely on the basis of tax rate. In the grand scheme maybe a few extra dollars a year on taxes may put you in a home you prefer.