r the mortgage Pete and Betty together with some small debts had a Debt To Income Ratio with all debts including housing and installment debt of some $1,000/month (car payments, credit cards, student loans, etc.) of 37%. Between Pete and Betty they earned $10,950/month. In some parts of the country that’s a lot, other areas it’s just squeezing by. In this case, this home and neighborhood was nothing special and was regarded by many as entry level. Now with the tax increase the monthly tax escrow moved up some ($541.67-$233.33=) $308.34/monthAreas of the country that have enjoyed a big run up in values the past year are now paying for it. Local tax assessors doing their jobs, based on comparable sales, are moving assessed values up to increasingly high levels. Housing affordability is a function of interest rates, housing prices together with the taxes and insurance and income levels of the citizenry. With the recent run up, in some cases the property taxes have more than doubled. What is particularly disturbing is that many municipalities (NOT ALL OF COURSE) are awash in cash with this new surge in revenue. These governing bodies have the power to reduce the milage rates to offer some sanity to these homeowners. Like found in the most recent Congress they are on a spending frenzy. Yes, there are always projects and departments that can use more cash, but every stinking penny of it?

Rainy day funding begs for savings and cost cutting measures with tight budgeting that will insure a governmental structure when the pendulum swings back. Typically the taxes go up and rarely go down. It’s just the way it is. Like it or not. A recent example follows: Pete and Betty bought their three bedroom, two and one half bath two story home with a two car garage and 2,500 square feet for $417,000. The taxes going in were $2,800 per year. Six months after moving in the new tax bill is now $6,500. Since the taxes are in the tax escrows the monthly went from $2,800/12=$233.33/month to $541.67/month or a 232.14% increase. Going in Pete and Betty put 5% down and qualified for 80% first mortgage and a 15% second mortgage to avoid PMI (Private Mortgage Insurance). The rate on the first mortgage is 6.25% with a 7.99% on the second mortgage. The payments are $2,054.03/month on $333,600 first mortgage and $458.54/month on a $62,550 second mortgage. Then the total monthly mortgage payments is $2,054.03 + $458.54 for a total principal and interest of $2,512.57 per month plus the taxes and insurance. The insurance based on a replacement value with $100,000 land value backed out is $3,600/year or $300 per month. The taxes at purchase were $233.33/month making for a total payment of $3,045.90/month. When qualifying for the mortgage Pete and Betty together with some small debts had a Debt To Income Ratio with all debts including housing and installment debt of some $1,000/month (car payments, credit cards, student loans, etc.) of 37%. Between Pete and Betty they earned $10,950/month. In some parts of the country that’s a lot, other areas it’s just squeezing by. In this case, this home and neighborhood was nothing special and was regarded by many as entry level. Now with the tax increase the monthly tax escrow moved up some ($541.67-$233.33=) $308.34/month.

th this new surge in revenue. These governing bodies have the power to reduce the milage rates to offer some sanity to these homeowners. Like found in the most recent Congress they are on a spending frenzy. Yes, there are always projects and departments that can use more cash, but every stinking penny of it?

Rainy day funding begs for savings and cost cutting measures with tight budgeting that will insure a governmental structure when the pendulum swings back. Typically the taxes go up and rarely go down. It’s just the way it is. Like it or not. A recent example follows: Pete and Betty bought their three bedroom, two and one half bath two story home with a two car garage and 2,500 square feet for $417,000. The taxes going in were $2,800 per year. Six months after moving in the new tax bill is now $6,500. Since the taxes are in the tax escrows the monthly went from $2,800/12=$233.33/month to $541.67/month or a 232.14% increase. Going in Pete and Betty put 5% down and qualified for 80% first mortgage and a 15% second mortgage to avoid PMI (Private Mortgage Insurance). The rate on the first mortgage is 6.25% with a 7.99% on the second mortgage. The payments are $2,054.03/month on $333,600 first mortgage and $458.54/month on a $62,550 second mortgage. Then the total monthly mortgage payments is $2,054.03 + $458.54 for a total principal and interest of $2,512.57 per month plus the taxes and insurance. The insurance based on a replacement value with $100,000 land value backed out is $3,600/year or $300 per month. The taxes at purchase were $233.33/month making for a total payment of $3,045.90/month. When qualifying for the mortgage Pete and Betty together with some small debts had a Debt To Income Ratio with all debts including housing and installment debt of some $1,000/month (car payments, credit cards, student loans, etc.) of 37%. Between Pete and Betty they earned $10,950/month. In some parts of the country that’s a lot, other areas it’s just squeezing by. In this case, this home and neighborhood was nothing special and was regarded by many as entry level. Now with the tax increase the monthly tax escrow moved up some ($541.67-$233.33=) $308.34/month

or not. A recent example follows: Pete and Betty bought their three bedroom, two and one half bath two story home with a two car garage and 2,500 square feet for $417,000. The taxes going in were $2,800 per year. Six months after moving in the new tax bill is now $6,500. Since the taxes are in the tax escrows the monthly went from $2,800/12=$233.33/month to $541.67/month or a 232.14% increase. Going in Pete and Betty put 5% down and qualified for 80% first mortgage and a 15% second mortgage to avoid PMI (Private Mortgage Insurance). The rate on the first mortgage is 6.25% with a 7.99% on the second mortgage. The payments are $2,054.03/month on $333,600 first mortgage and $458.54/month on a $62,550 second mortgage. Then the total monthly mortgage payments is $2,054.03 + $458.54 for a total principal and interest of $2,512.57 per month plus the taxes and insurance. The insurance based on a replacement value with $100,000 land value backed out is $3,600/year or $300 per month. The taxes at purchase were $233.33/month making for a total payment of $3,045.90/month. When qualifying for the mortgage Pete and Betty together with some small debts had a Debt To Income Ratio with all debts including housing and installment debt of some $1,000/month (car payments, credit cards, student loans, etc.) of 37%. Between Pete and Betty they earned $10,950/month. In some parts of the country that’s a lot, other areas it’s just squeezing by. In this case, this home and neighborhood was nothing special and was regarded by many as entry level. Now with the tax increase the monthly tax escrow moved up some ($541.67-$233.33=) $308.34/monthe on the first mortgage is 6.25% with a 7.99% on the second mortgage. The payments are $2,054.03/month on $333,600 first mortgage and $458.54/month on a $62,550 second mortgage. Then the total monthly mortgage payments is $2,054.03 + $458.54 for a total principal and interest of $2,512.57 per month plus the taxes and insurance. The insurance based on a replacement value with $100,000 land value backed out is $3,600/year or $300 per month. The taxes at purchase were $233.33/month making for a total payment of $3,045.90/month. When qualifying for the mortgage Pete and Betty together with some small debts had a Debt To Income Ratio with all debts including housing and installment debt of some $1,000/month (car payments, credit cards, student loans, etc.) of 37%. Between Pete and Betty they earned $10,950/month. In some parts of the country that’s a lot, other areas it’s just squeezing by. In this case, this home and neighborhood was nothing special and was regarded by many as entry level. Now with the tax increase the monthly tax escrow moved up some ($541.67-$233.33=) $308.34/monthr the mortgage Pete and Betty together with some small debts had a Debt To Income Ratio with all debts including housing and installment debt of some $1,000/month (car payments, credit cards, student loans, etc.) of 37%. Between Pete and Betty they earned $10,950/month. In some parts of the country that’s a lot, other areas it’s just squeezing by. In this case, this home and neighborhood was nothing special and was regarded by many as entry level. Now with the tax increase the monthly tax escrow moved up some ($541.67-$233.33=) $308.34/month. Upon purchase of the home some needed items were upgraded such as carpet, paint, furniture, counter tops thinking they had their budget was under control. Now their Debt To Income was stretching to 50% of their income before taxes and reductions for social security taxes and Medicare taxes. Things were now officially in a tight financial pinch. They had saved the 5% down payment and closing costs for three years and had $38,000 to put down and satisfy the two-month housing reserve requirement. About two weeks after their purchase the neighbors next door, who have since become friends, bought a similar home but utilized an Option ARM and now with the negative amortization kicking in found themselves really over the barrel with the new tax bill. Municipal success is great. Everyone loves the area and tries to get in to enjoy the amenities such as schools, employment centers, shopping and the whole enchilada. Then affordability begins to raise its ugly head and suddenly the area is not so attractive. Pete and Betty were now officially working for the lender. They committed over a two-year period to find another city for jobs and housing. They decided to take their life back and determined the price to be paid-just too high.

Employers looking to establish new locations are making surveys and performing due diligence studies which includes housing affordability. The trend and shift is noted. With higher prices and higher property taxes the relocation of key employees is weighed against what is available in the area versus housing in the area they are leaving. All of this is factored in. With the housing market slowing down and average sales times extending out to three to four times from six months prior sales period. Prices will drop but the tax load may be slow to follow with neighborhood comparable sales. Relocating companies finding an unfriendly tax structure keep looking.

With many municipalities experiencing similar rising tax assessments this phenomena is being repeated. An extra tax layer is burdening the homeowner. Many governments to blunt this trend enacted homestead concessions whereby owner occupants are giving some tax relief. Some