Property Taxes Make Qualifying Difficult For Some Borrowers

Many borrowers forget to factor in property taxes when calculating their potential mortgage payment

Property Taxes Make Qualifying Difficult For Some Borrowers
March 31, 2016

When most homebuyers sit down to calculate whether they can afford a particular home, they often assume their monthly mortgage payment will include only the principal and the interest. Many forget to factor in property taxes and their monthly homeowners’ insurance premium. This often leads borrowers to experience sticker shock when they see what a property will actually cost them, and it may also prevent some from qualifying for a property they believed they would have no trouble purchasing. This is especially true in areas that have very high property taxes.

Those applying for jumbo mortgages — loans in excess of $417,000 in most parts of the country or $625,500 in higher-priced areas — are also likely to face high property taxes. Total Mortgage Services CEO John Walsh points out that most potential buyers are focused on interest rates but fail to look at property tax rates or include their prorated monthly insurance premium if it is being rolled into their monthly mortgage payment.

Guaranteed Rate CEO, Victor Ciardelli, adds that potential borrowers who cannot show a steady income, such as those who are self-employed, must be especially careful to look at property taxes and insurance premiums because these two additions to the mortgage may make their debt-to-income ratio higher than most lenders like. This may force them to make a larger down payment in order to qualify for their mortgage.

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Irene | 03.31.16 @ 19:09
Great info, people need to factor in other issues as well like whether they can afford repairs that may come up
Steffanie | 03.31.16 @ 19:10
We are lucky enough to live in an area where taxes are manageable. Will file this away though for future use.
Elaine | 03.31.16 @ 19:10
Never thought about keeping the insurance and taxes would make that much of a difference. I knew it would make some but not that much.
Nancy | 03.31.16 @ 19:12
Property taxes make a huge difference in the affordability of a house, especially long term. Your mortgage might be fixed but taxes aren't.
Carla Truett | 03.31.16 @ 19:12
I am glad our taxes are added in with our payment. As well as our insurance.
Sarah | 03.31.16 @ 19:12
taxes do come as a surprise to some. I can't stand the things honestly. I own the land... but I don't
Tina | 03.31.16 @ 19:12
This is great info - Even on a small loan this can add $100 a month to the payment. I think less foreclosures would happen if more education about the true cost of a mortgage were offered!
trish | 03.31.16 @ 19:12
We had an amazing realtor and mortgage broker when we bought our house. luckily they were friends of ours, so we didn't experience much sticker shock after buying our home.
$commenter.renderDisplayableName() | 12.11.16 @ 12:16
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