Property Taxes and Insurance | The Numbers That Surprise Homeowners

hey guys welcome back to another week of mortgage matters in minutes again I'm your host Brent Rasmussen, owner of Mortgage Specialists and this time of year is usually very very busy people are going back to school and getting ready for the fall maybe Sports Seasons starting back up back to school shopping all the above and sometimes we're not so excited about that but other times it's nice to be back to a normal regimen and that's coming your way so let's chat today here real quick about why your mortgage payment isn't the biggest cost and this title could go many different ways but one of the ways that we want to discuss today is the different sets of numbers that you're going to pay to have a home and there's lots of those I think a lot of times people get hung up on specifically the interest rate and what that rate is and if I get a better interest rate obviously I'm going to get a better payment but sometimes there's other items that are missed along the process and there's lots of numbers to consider when you're purchasing a house and we know our consumers don't understand them all but we're here to help guide them and show them the breakdown of them I can tell you here this last week a couple clients you know had getting quotes for nearly the same interest rate but they're telling me that the payment at another institution is much cheaper and I'll say Well it can't be in it won't be if a rate is exactly the same and taxes and insurance are exactly the same then the payment's going to be exactly the same but we have to estimate numbers a lot of times when we're doing pre-approvals and before someone buys a house so let's chat about the different sets of numbers that a lot of times aren't always going to be known when you do the pre-approval or when you buy a house and obviously the first two that come to mind are property taxes and homeowners insurance house insurance is Hazard Insurance homeowners insurance and we're seeing both of those two go up very quickly for people that our clients have already been in their homes for the last couple years and they're contacting us reaching out saying hey my payment up payment went up two three $400 a month and they're saying well how can my mortgage payment go up well your payment of principal and interest is a fixed rate that is not going to increase it's going to be the property taxes in the insurance I can tell you next to nearly no one has adjustable rates right now a few people might because of the rate environment that we're in but generally speaking here we're talking about 90% 80% of the population is going to carry a fixed rate mortgage loan so your taxes and your insurance make a big impact on what you're buying so when you're looking at properties you do want to check into what do property taxes look like and I can tell you people fail to look at that when it comes to new construction property taxes are significantly higher in areas that are newer to to pass on the expense of developing the area and getting electricity utilities water to all the different places and the developers pass on that expense in an SID to the consumer so looking at interest rates I will tell you is a very important thing but taxes insurance and then mortgage insurance is another item that obviously can be impacted very drastically especially if you don't need mortgage insurance and you have enough Equity you can look at getting your PMI dropped off which will save you money per month what I'm trying to suggest here is that there's many different factors you can continually look at your mortgage to make sure that you're getting the cheapest amount that's out there I think the biggest thing that many consumers don't think about also when it comes to a true cost of a home is the maintenance that's needed and the cost that's needed to keep up with properties as we seen here in Omaha last couple weeks some massive storms coming through no one expects their fence to be knocked over or a tree to fall on their house or pay a deductible for this or that or any kind of wind storm damage that many times is cheaper to pay out of your pocket than it is to have a claim because once you have one or two claims on your homeowners insurance policy they might not renew you or they're going to double or triple your annual premiums which isn't very good also looking at a property and their utilities and the HOA dues that makes a major impact and I will tell you A lot of times first-time home buyers don't consider those things they like the pretties they like the new upgrades they like the feel but if you have old windows Old Furnace old roof no insulation your utility bills you could be spewing money out the window very very easily so your mortgage payment again isn't your highest cost of home ownership there's other things that we can continually look at such as all the items that I've just discussed to bring down your payment or to at least acknowledge that those payments exist so you know whether you want to make that payment or you don't want to make that payment lastly what we want you to look at is the long-term Financial situation implications stability of what your decision is a lot of people forget that when they purchase a home that value of that home should gradually go up and it has been going up it's been a very very good investment for people that have had properties over the last 40 50 years whether you own it as a primary residence or as a second home or even as a rental property but you can also look at your Investment Portfolio is your property keeping up with your Investments that probably never will be Case by case or I mean every year by year of the numbers but as long as we're using the home as we intend it for its purpose is it keeping up with a normal rate of return for housing a lot of people look at it and say well I can take my money as opposed to putting in the house and leave it Investments sure I completely help clients look at that as opposed to pulling 1 or $200,000 out of their Investments putting it into their house they might leave it in the stock market because they're getting a decent rate of return that's going to be more impactful for them than it is going to be into their house lastly we can chat about is we do agree interest rates make a big impact we never said that that's not everything or not anything but it is something to review you I can tell you right now clients are reviewing and calling many more places than they ever had in the past thinking an eighth or a quarter per is going to save them into that house P that's going to be you know $15 to $30 a month is that really going to make or break you it shouldn't you shouldn't be in that price range if $1 15 to $30 is going to make or break you but we still want you to be on top of your interest rates if interest rates drop which they're scheduled to do this fall and next spring yes we advise all of our clients to refinance and make sure that the cost of the refinance makes a difference and not just refinancing to get a cheaper rate and maybe not have an impact on your outflow of your payments moving forward as well lastly I can suggest creating emergency fund for all these extra things that maybe come up as your taxes and your insurance go up continue to make extra payments to your savings account saving extra money in case storms continue to keep happening every spring and every summer over the last few season seasons and then just typical maintenance of anything you can think of in regards to your house from painting to mowing to all those exterior interior items that might break on you that is a true cost of home ownership while we still believe home ownership is still one of the greatest things that Americans can receive we always will believe that and the facts of the numbers show that it shows that housing has done very very well as an investment over the last 40 50 years but what we want to challenge you is looking at the entire aspect of closing cost taxes Insurance prepaids mortgage insurance house insurance and making sure that those numbers are what you want them to be and you're actually educated to know what they are so here at mortgage specialist we've always been high in education a lot of these words don't mean a lot to a lot of people we understand that we understand that if I went and took over your job I wouldn't understand the acronyms or what the abbreviations or terminology or how to do your job is we all have expertise and we want to be the experts for you in the mortgage Arena and we're here to answer any questions just reach out to us at 402-991-5153 or check us out on our website at mtg-specialists.com and definitely like And subscribe if you love the content or even like the content or please leave us a comment below we're always responding back to everyone that's leaving us a question input comment and we'd love to see you here each and every week at mortgage specialist for mortgage matters in minutes have a great rest of your week and we'll see you soon Mortgage Specialists driven trusted reliable