Homebuyers are a busy lot. They need to research homes and neighborhoods that they would consider living in. Buyers should take some time to evaluate their finances to find out what kind of house and how much they can actually afford.
Some taxes are involved in the sale of a property. The specific types and amounts can vary according to the particular transaction. Most of them are very inexpensive and can be paid upfront all at once.
Buying a home in California can take time. The entire process may not be completed for several weeks or months. There are certain actions that need to be taken and different people that will become involved at various stages.
You may also experience unexpected delays or other issues. You should still be able to achieve your goal of homeownership in most instances. Planning, persistence, and determination can help you succeed.
Here are a few taxes associated with buying a home:
1. Transfer taxes.
A transfer tax is a fee for changing the ownership of the home from the seller’s name to the buyer’s name. This is usually charged by the state or local recorder or other respective government offices.
Transfer taxes are typically no more than a few hundred dollars at the most. The state of California currently charges a transfer tax rate of $1.10 per $1,000 of property value.
2. Property taxes.
Property taxes are the largest tax that most homeowners have to pay. They are often set by the city, county or state assessor’s office. Property taxes are based on the home’s assessed value, so this amount can fluctuate from one year to the next. California’s effective property tax rate is 0.73 percent as of this writing.
Property taxes are usually paid once or twice a year. You should receive an annual assessment statement in the mail. This will give you a good idea of how much you’ll be expected to pay. Property taxes can range anywhere from a few hundred to several thousands of dollars or more annually, depending on the price of the home and it’s assessed value.
Other common costs involved in buying a house
- Down payment
Most buyers make a down payment as part of their home purchase. Down payments can vary based on the type of arrangement. Some borrowers pay as much as twenty percent of the home’s sale price for the down payment.
There are pros and cons of making a larger down payment. Making a bigger down payment can mean that it will take less time to pay off the remainder of the home loan. However, it can also take people longer to be able to afford the down payment for the house that they want.
2. Monthly bills.
You will be responsible for paying your monthly mortgage payments. They will either be billed directly or taken out of your checking account automatically for you. The exact amount will be based on the terms and conditions in your loan contract.
Homeowners will also pay monthly utility bills. Trash pickup, water and sewer services, and electricity will be billed by local service providers. You may want to find out what companies the home seller used before the sale has been completed so that you can decide if you want to remain with them or seek out other companies to work with.
Most of these fees are based on usage, so the more water and electricity that you use in a month, for example, the higher your monthly bills will be.
3. Property taxes.
Property taxes are charged by your county assessor or other respective state or local government value. They are determined according to the assessed value of your home. That’s why property taxes can fluctuate from one year to the next. Most property taxes are billed either annually or biannually. You may need to pay a prorated portion of the year’s property taxes depending on when the sale was completed.
4. Association dues.
If your home belongs to a townhouse or condominium association, you will be required to pay association dues. These fees cover maintenance items, such as snow removal, duct cleaning, lawn care, and more These dues are charged monthly, quarterly, biannually or annually and may run a few thousand dollars or more each year. You may need to pay a prorated part of these dues based on the time of year when the transaction was finalized.
5. Closing costs.
Homebuyers are charged certain closing costs. Appraisal, inspection and title insurance are common closing cost components. The closing statement should explain the closing costs in greater detail. The total amount will depend on that itemization and the respective amounts for each line item. Be prepared to set aside an extra thousand or two for these costs on average.
These taxes and other charges don’t include any moving or furniture expenses that you may incur. Keep in mind that you will also be responsible for repairs and upkeep of the property. You’ll have to take care of leaky faucets, damaged siding, faulty air conditioners, and other items. You can take care of these matters yourself or hire professionals if things get beyond your level of expertise or comfort.
Conclusion
It’s a well-known fact that owning a home can be an expensive proposition. That’s why it’s important to understand what you’re getting into before signing a purchase agreement. Make sure that you fully understand what you will be responsible for before signing anything.
Take some time to review your financial situation before applying for a home loan. Any unnecessary expenses should be cut from your budget immediately, If you’re carrying credit card balances or have other loan obligations, they should be paid off or down as much as possible. Having little to no outstanding debt will make you more favorable to potential lenders.
Consult your mortgage lender, tax preparer or tax attorney if you have any questions or concerns regarding your tax liabilities and other homeowner expenses. It can be overwhelming and intimidating at first, but the vast majority of these charges are very manageable.
Once you’ve been given the keys to your new home, you can breathe a sigh of relief. Congratulate yourself on a job well done. It’s time to focus on staying on top of your income and expenses so that you can keep living in the house that you wanted for as long as possible.
📞 Have Questions? Ask The Chris Eckert Real Estate Team
Give The Chris Eckert Real Estate Team a call today at 650.627.3799 to learn more about local areas, discuss selling a house, or tour available homes for sale.
