1st time buyer question: mortage payment

[darrell2525]

Originally Posted by t.e.sumner

With the usual caveats about estimates here you are.


We loan officers generally tell people to budget about 1% of the sale price of a house for real estate taxes, home insurance and principal plus interest. While it is only an estimate and your reality will vary, we would need to know several details before a more exact amount could be given.

1. Where exactly is the house? See below about districts. Without the exact address we can only guess which districts you must pay.
2. Are you the homeowner or just an investor? Homeowner can get an exemption of a fixed amount, e.g. $15,000, and/or a percentage exemption, typically 20% of market value.
3. Are you over age 65? Senior citizens can claim an additional fixed or percentage exemption, usually 20%.
4. Are you a veteran with disabilities? Disabled veterans can get up to another 20% off the value.

The tax is applied to the market value less exemptions.


Each taxing district the house is in will be paid, usually by a single combined bill through the county for all applicable districts, but in many cases the school district is separate from the county taxing entities and the city may be separated, too. Lots of homeowners are in 6 or 7 districts.


Here is a typical Houston tax bill breakdown on a $170k home with NO exemptions: $4,141.68

1. From Harris County plus special districts – $667.06 + $413.85 (a+b+c+d) = $1,080.91

1. County Hospital $326.67
2. County Flood Control $52.80
3. Port of Houston Authority $24.43
4. County Education Dept $9.95

1. From Houston Independent School District – $1,966.39
2. From City of Houston – $1,094.38

You can find the millage for each district on the Tax Appraisal District site from which the 7 amounts above were calculated.

After standard homeowner's exemptions but not senior or disabled: $3,139.84


So, with homeowner's exemptions the monthly payment to escrow for real estate taxes would be $262 and without exemptions would be $345. This is a lot less than $528 you guessed.


However, as another member commented, you will need to add the Mortgage Insurance premium of about $60-70/month. And, if you live in a subdivision with a homeowners association, you will have to figure their fees separately (not part of your tax bill) and pay them each year. Think of it as another utility bill, like water, garbage, electricity etc.


So, let's say that you get a loan for about $170k with a 6.5% interest rate for 30 years. Your monthly statement will show

1. Principal plus Interest $1,074.52
2. PMI/MIP $70.83
3. Tax escrow $345.00
4. House Insurance escrow $111.00 Total to Mortgage Co $1,601.35

NOTE: the PMI/MIP payment eventually will be discontinued. Rules vary for when the MI is no longer needed, but usually after a few years and the value of the loan has dropped below 78% of the house value, the MI can be eliminated.
So, after all is said and done, the payment is 0.942% of the value of the house, making 1% a good rule.

Thank. That makes me feel good. I have a few questions for you.

1. How does it take to apply for homeowner's tax exemptions? Is it a year after I move in the home?

2. If I want an accurate tax payment on the house I am considering buying do I need the to call county where the house is located?

3. From your calculations, why is the interest & principal payments so high (i.e., Principal plus Interest = $1,074.52) on a 170k? What can I do to reduce that; perhaps, give more money for down payment?

Thanks. Hope to hear from you soon.