Do Property and sales taxes differ from city to city? (Phoenix: mortgage, loans)

[SOON2BNSURPRISE]

Seems that many people bring up the difference in property tax and sales tax from one city to another. I am only familiar with Ventura County California Tax situation. There the taxes are based on the county that you live in. Sales tax is county wide and not city by city. I have heard in other threads post's about the tax situation. Do the cities charge different rates of tax? What is the sales tax for the area? Also in California food is not taxed. Is that the case in Arizona?

[Ponderosa]

Basically, there is state tax and then cities add their own. There are a couple other special taxes added on to the sales taxes like jails and handouts to the wealthy for things like stadiums and light rail and also for freeways. Most places come up to about 8.25 % give or take. The state does not tax food, but most of the cities do - Phoenix being an important exception.

Property taxes vary from city to city. The biggest part of property taxes though is school taxes and these are highest in areas where new schools are being built because of growing populations (like Surprise) because much of the school cost is funded by bonds. Bonds are exempt from tax increase limits and have gone sky high along with the cash values of property. Property in Maricopa county is assessed every two years so there will be no relief soon in taxes due to declining values.

[SOON2BNSURPRISE]

Thank you Ponderosa, We won't move into our home until sometime late next year, because the builder is still waiting for the building permit and has not started building. With the decrease in our home price do you think that the property taxes will reflect the price at the time we close? They recently decreased the value of the home and someone said they could end up doing it again before we close.

[Master Shake]

Property taxes are based on the county appraisal value of your house -- which seldom is a match for the true value of your home (what you paid, or what you could sell it for). Usually, the appraisal value tends to be lower than the true value of your home. Given this, I doubt the county would actually lower the appraisal value, especially since their value tends to be 1-2 years behind.

[SOON2BNSURPRISE]

Originally Posted by Master Shake

Property taxes are based on the county appraisal value of your house -- which seldom is a match for the true value of your home (what you paid, or what you could sell it for). Usually, the appraisal value tends to be lower than the true value of your home. Given this, I doubt the county would actually lower the appraisal value, especially since their value tends to be 1-2 years behind.

That leads to another question then. If the appraisal value is lower for the home, then how does the financing of the home work? For example if a home is appraised at $155,000 and the cost to buy the home is $175,000 then does the buyer need to make up the difference in the price? I want to make sure that our loan, (we are prequalified, for when the home finally closes.) pays for the balance that my down payment doesn't pay. This is our first go around with buying a home of our own. I realize that these questions are better suited for the lender. At the same time I like this format so much that I am offering my questions to all of you.

[Ponderosa]

Originally Posted by SOON2BNSURPRISE

That leads to another question then. If the appraisal value is lower for the home, then how does the financing of the home work? For example if a home is appraised at $155,000 and the cost to buy the home is $175,000 then does the buyer need to make up the difference in the price? I want to make sure that our loan, (we are prequalified, for when the home finally closes.) pays for the balance that my down payment doesn't pay. This is our first go around with buying a home of our own. I realize that these questions are better suited for the lender. At the same time I like this format so much that I am offering my questions to all of you.

The county appraised value is only for taxes and will not affect the loan at all. The lender will do an appraisal (this has been a big issue with the sub-prime deal in that lenders were accused of deliberately over-valuing). The mortgaged amount plus the down payment must be less than the appraisal or the lender may balk. I wouldn't worry about the appraisal. With a new home builder it is all "taken care of" - wink, wink.

[Gretchen B]

Originally Posted by SOON2BNSURPRISE

That leads to another question then. If the appraisal value is lower for the home, then how does the financing of the home work? For example if a home is appraised at $155,000 and the cost to buy the home is $175,000 then does the buyer need to make up the difference in the price? I want to make sure that our loan, (we are prequalified, for when the home finally closes.) pays for the balance that my down payment doesn't pay. This is our first go around with buying a home of our own. I realize that these questions are better suited for the lender. At the same time I like this format so much that I am offering my questions to all of you.

The lender wants to be sure they're covered for the loan. A low appraisal could mean that you'd need to put down additional cash in these scenarios:
1) You have gotten an 80/20 loan (20% down, financing 80%). So let's say you're paying $200,000 for the house, and putting $40,000 down (20%) and financing $160,000. If the appraisal comes in at say $180,000, the lender will probably be okay with that because their $160,000 investment is covered. However, now 80% of the house value is $144,000, so to avoid PMI you'd have to come up with an additional $16,000.
2) You're financing 95% and putting 5% down. In the same $180k appraisal vs $200k selling price - now the lender will not do the loan unless you come up with another 5% ($10,000) so that the financed amount is at least equal to the appraised value.

Most contracts allow for a buyer to cancel the contract if the home does not appraise for the purchase price (or for a price acceptable to the lender).

[Gretchen B]

oic - this is a new home. The appraisal wouldn't have been an issue in the past, but with the tightening of mortgages, lenders can't get loans "pushed through" like they used to. Plus - would you really want to pay more for a house than what it's worth, especially in this market????

[SOON2BNSURPRISE]

Thanks everyone. The home started at just over $200,000. We are putting down $25,000. Now the builder lowered the home price $30,000 and we are still putting down $25,000. I am hoping that they will lower the price a couple more times before we close next year on the deal. Just didn't know how this appraisal business worked, or the tax business.

[ibarrio]

Trust me. Your actually going to be happy when you tax bill comes. You will see a big difference from California.