The smart home buyers guide to understanding the total price


A family walking into an empty home with a real estate agent

Buy from a stronger position when you understand the total cost of your new home and prequalify for a mortgage – whether you’re a first-time buyer or buying your next home.

Knowledge is power, especially when it comes to buying a home. However, home buying is not something most of us do often – and this creates a knowledge gap. Based on our conversations with thousands of members, here is some guidance that will make you a smarter home buyer.

The selling price is not the only price

The price of your new home is just one factor in determining your monthly payment – whether you’re a first-time buyer or buying your next home.

Of course, interest rates will influence monthly payments. Some home buyers overlook other factors, though. Like homeowner association fees, also called HOA dues, and perhaps private mortgage insurance. One certain factor, however, is taxes.

Taxes on the listing are not the taxes you’ll pay

When a property is sold in Michigan, the value is reassessed to take current market value into consideration. This means that when you buy a property, your taxes may be higher than the previous owner’s.

This might seem unfair until you consider the flip side of property tax law. Through the Headlee Amendment of 1978, Michigan also caps property tax increases for existing owners. The law protects you against excessive tax increases.

So, if you buy in a neighborhood that suddenly gains in popularity and prices are driven up, up, up, your property tax increases are limited to a multiplier set by the state. In 2017, the multiplier was 1.009. It’s applied to the state formula like this:

2017 CAPPED VALUE = (2016 Taxable Value – LOSSES) X 1.009 + ADDITIONS

You can quickly estimate taxes for any property using the online Michigan Property Tax Estimator. The estimator will also show you the difference in taxes if you buy the home for your principal residence or as a second home.

Prequalify for an advantage in a seller’s market

A tight housing market can mean that sellers are considering your offer in comparison to one or more other offers. A letter from Consumers stating you are prequalified for a mortgage could sway the sellers to accept your offer. Prequalification provides them with assurance that you have the financial resources to see the sale through to closing.

Close the knowledge gap

Most people buy a home just a few times in their whole lives. Often there are many years between purchases. It’s natural to have questions. Our team of experienced mortgage loan officers is here with answers for you. Give us a call 800-991-2221.

Consumers helps more than 1,000 members finance their homes each year. When you need a mortgage or home equity line of credit, call us at 800-991-2221. We’re here to help you get the home of your dreams!


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