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Buying a house - Taxes and Insurance

Buying a house - Taxes and Insurance

Old Mar 14th 2012, 8:43 pm
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Default Buying a house - Taxes and Insurance

I'm looking at buying a very small house to do up over the next couple of months. Do you guys have any hints and tips for me?
At the moment I'm in the process of putting together a plan with a time scale for the project and a budget for the whole thing. I'm told that we'll have to start paying tax and insurance from day 1. What im struggling with at the moment is just a ballpark figure for what the outgoings will be up until we move in. I've no idea what this is dependant on so if you need any info to answer this then feel free to ask. Also, are there any other "hidden" costs that I need to be aware of?

Thanks in advance of any help you can offer,


Southy
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Old Mar 14th 2012, 9:12 pm
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Default Re: Buying a house - Taxes and Insurance

Originally Posted by Southy_SWFC View Post
I'm looking at buying a very small house to do up over the next couple of months. Do you guys have any hints and tips for me?
At the moment I'm in the process of putting together a plan with a time scale for the project and a budget for the whole thing. I'm told that we'll have to start paying tax and insurance from day 1. What im struggling with at the moment is just a ballpark figure for what the outgoings will be up until we move in. I've no idea what this is dependant on so if you need any info to answer this then feel free to ask. Also, are there any other "hidden" costs that I need to be aware of?

Thanks in advance of any help you can offer,


Southy
Properties that we've seen round our way usually have an estimate of mortgage costs on the realtors' websites and this can be set to include estimated taxes and insurance. Dunno if this is just local to us in NYS or a general thing but sites like Zillow, Trulia etc all do it. Local property taxes vary widely by state and locality.
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Old Mar 14th 2012, 11:14 pm
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Default Re: Buying a house - Taxes and Insurance

Originally Posted by rpjs View Post
Properties that we've seen round our way usually have an estimate of mortgage costs on the realtors' websites and this can be set to include estimated taxes and insurance. Dunno if this is just local to us in NYS or a general thing but sites like Zillow, Trulia etc all do it. Local property taxes vary widely by state and locality.
Those sites have been excellent and exactly the kind of thing I was looking for. Thanks very much.

Now I don't suppose you want to lend me 5,000$ do you?
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Old Mar 15th 2012, 12:57 am
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Default Re: Buying a house - Taxes and Insurance

Your town hall will be able to give you an idea...it's a percentage of the accessed value of the property.

The in-laws have a 3 bed house with a decent sized garden, but out in the sticks and they're paying a few hundred in property tax.

You'll be paying more in the Augusta area, but it won't be massive.
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Old Mar 15th 2012, 1:34 am
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Default Re: Buying a house - Taxes and Insurance

If you're not living in it while you do it up, make sure the insurance is Ok with that, especially if its going to be an extended period. Ours has a max number of days "empty" clause in it.....think its 45 days, but wouldn't swear to it.

Plus your Property tax will probably be payable in full whether you are living there or not - it isn't like the UK where you get a break on the council tax(most places anyway) if the property isn't occupied for a period. In fact, check the Homestead exemption for your taxing authority to see whether you will qualify for the HE even if you are not living there....
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Old Mar 15th 2012, 2:58 am
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Default Re: Buying a house - Taxes and Insurance

Originally Posted by Bob View Post
Your town hall will be able to give you an idea...it's a percentage of the accessed value of the property.

The in-laws have a 3 bed house with a decent sized garden, but out in the sticks and they're paying a few hundred in property tax.

You'll be paying more in the Augusta area, but it won't be massive.
From the sites given above, I think we've got this figure sorted but we'll enquire at the town hall so thanks for your help.

Originally Posted by Yorkieabroad View Post
If you're not living in it while you do it up, make sure the insurance is Ok with that, especially if its going to be an extended period. Ours has a max number of days "empty" clause in it.....think its 45 days, but wouldn't swear to it.

Plus your Property tax will probably be payable in full whether you are living there or not - it isn't like the UK where you get a break on the council tax(most places anyway) if the property isn't occupied for a period. In fact, check the Homestead exemption for your taxing authority to see whether you will qualify for the HE even if you are not living there....
I'd forgotten about this and it isn't mentioned on the sites above. It mentions what insurance would be if we were living there but nothing about if we're not. I guess I should contact an actual insurance company and get a quote. Again, thanks for your help.
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Old Mar 15th 2012, 3:42 pm
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Default Re: Buying a house - Taxes and Insurance

Don't forget that, dependent upon the time of year that the house will be empty, you may have to keep it heated, thus adding expense. The seller should be asked to provide oil/electric bills for the prior year to give you an idea of what it costs to heat the place. And do hire a home inspector before you buy -- you don't want any nasty surprises!
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Old Mar 15th 2012, 5:14 pm
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Default Re: Buying a house - Taxes and Insurance

Originally Posted by Nutmegger View Post
. . . The seller should be asked to provide oil/electric bills for the prior year to give you an idea of what it costs to heat the place.
That's a great tip!

Like the OP, we're looking to buy a house in New England, so heating expenses are a primary concern. We've already decided to avoid oil heating & look only at gas heated properties. Excellent idea to ask sellers for copies of prior bills.
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Old Mar 15th 2012, 5:30 pm
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Default Re: Buying a house - Taxes and Insurance

Originally Posted by Nutmegger View Post
Don't forget that, dependent upon the time of year that the house will be empty, you may have to keep it heated, thus adding expense. The seller should be asked to provide oil/electric bills for the prior year to give you an idea of what it costs to heat the place. And do hire a home inspector before you buy -- you don't want any nasty surprises!
If you know who provided the utilities, you can just ring those companies up and get average annual monthly costs for the previous 5 years and annual high/lows.

For the electric, that'll be simple as there isn't any choice in Maine, it's CMP.

Oil is shit though, but one advantage as a renter, landlord has to include it in the rent up in Maine.

Gas is pretty cheap, but pretty rare to be mains fed in Maine, mostly via a tank if you get gas.
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Old Mar 15th 2012, 6:11 pm
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Default Re: Buying a house - Taxes and Insurance

We're fairly sure that the house we're buying has been empty for about 10 years so we won't be able to find any of this stuff out. Its basically a shell with nothing in it so we'll be adding whatever heating is best when it comes to it. The huge bonus with this is that my Father-in-Law builds houses for a living so all that kind of stuff is up to him, not me.
Thats assuming we get the house, theres a bit of competition with it. Will hopefully know more tomorrow.
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Old Mar 16th 2012, 5:39 pm
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Default Re: Buying a house - Taxes and Insurance

Originally Posted by Southy_SWFC View Post
...
You might try to find a similar house in the area to use as a comparison and try to get idea of utility costs.

Take extra due diligence!!.... ie, what needs to be done and taken care of and the costs of which to do it; obviously turn every stone to ensure what one is potentially taking on. Vacant that long, - I'd get the plumbing pressure tested... scope the main sewer line (if on septic, want to look too at the condition of the system), look into the permit history of the house .. If there is a gas tank, best to double check if its leased or owned.

If you think there are competing offers, you might want to consider a sort of escalation clause to increase the likelihood of being the highest and best, if you truly want the property.
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Old Mar 16th 2012, 7:15 pm
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Default Re: Buying a house - Taxes and Insurance

From what we know, it was owned on a reverse mortgage so when the old owner died it went to the bank. Thats who owns it now. When the bank got it 10 years ago they stripped it and I mean stripped. Theres no electricity or any connection to water including the old water heating and the sewage line. The house will need all new wiring (there literally isn't any left), a septic tank and all new plumbing, and a new roof.
For some reason it wasn't on the market until about 2 years ago when it entered at $30,000 but sat until December without any interest. Then they took it off the market only for it to be put back on a month ago at 19,000. With the amount of money needed to do it up we offered 10,000 which was quickly rejected. That was before we knew that only 3months earlier it was on the market at $30,000. Now we're looking at going in again with something closer to the asking price. We're just waiting on the funding for the whole project to come through before we know how high we can go.

Hopefully we won't need to put an escalation clause in but I'll certainly mention it to my in law and see what he thinks. Thanks for your advice.
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Old Mar 17th 2012, 4:13 pm
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Default Re: Buying a house - Taxes and Insurance

Originally Posted by Southy_SWFC View Post
We're fairly sure that the house we're buying has been empty for about 10 years so we won't be able to find any of this stuff out. Its basically a shell with nothing in it so we'll be adding whatever heating is best when it comes to it. The huge bonus with this is that my Father-in-Law builds houses for a living so all that kind of stuff is up to him, not me.
Thats assuming we get the house, theres a bit of competition with it. Will hopefully know more tomorrow.
If you're buying cash then you don't need insurance. Property tax will be included at closing and pro-rated for the year in closing costs. I'm assuming you are because a shell will be unmortgageable as a guess, and you're up against contractors who are going in with cash.

If your FiL is a licensed contractor get him to pull permits as you'll have no restrictions on renting and/or selling. If you pull a permit as a homeowner, check the renting/selling restrictions (if that's what you are going to do) as there could be a 12 month non renting/selling clause.

If you intend to live in the property then permits are great as you not only get your FiL's help, but you can pick the brains of your local inspectors who generally are quite approachable.

If you don't pull any permits, then just make sure the property doesn't look like a building site. Last thing you want is a "work stop" order on the property.

Good luck! Doing one of these at the moment! (and two more after this one is done....)
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Old Mar 17th 2012, 8:12 pm
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Default Re: Buying a house - Taxes and Insurance

Originally Posted by Southy_SWFC View Post
...
Wow. Has it been condemned?!?! That does happen a fair amount, esp bank owned where people will strip a house clean, inc piping for the copper; even cabinets. I've been in some where people have actually taken dry wall!!
I'd also check the title history too, see if anything else has been recorded on it. In theory the bank will sell it free and clear title but don't assume everything is peachy, you want to protect yourself from unrecorded interest in the property, for all you know someone knows its in such crap condition and waiting for when its worthwhile to come forward.. ie when its greatly improved in value. (This is where you want to review title insurance policy and pay close attention to the restrictions/noncovered items). Personally, I wouldn't automatically accept the title policy from the bank... they will provide the bare minimum and what is satisfactory for themselves); therefore, consider obtaining your own title policy... (extended coverage atleast). Remember, the bank will only warrant the title only for the duration they've had it, which is why they tend to give a special warranty deed.

Also, talk to your insurance agent and ask if they can obtain a C.L.U.E. report .. see if there have ever been any insurance claims on the property.

Lending shouldn't be impossible for it, they may treat it as needing a construction loan (and convert it to perm financing once completed) due to its condition since its not technically habitable. No doubt you are running the numbers of repair costs etc. Cash with a line of credit might be an option if feasible. No denying that there are big ticket items to address! Review before you sign!!

Oh, re the property tax.. normally they are prorated in arears. See how the assessors office has it, in terms of condition etc, because that is typically something they may consider when determining assessed value for tax purposes as part of their equation. So, if you get the house, and if you are allowed to petition or get an approval for a condition change to bare minimum, it may affect the amount of tax owed for this coming year ... If then you sell it, the buyer might have to complete similar paperwork and since it will be remodeled, again, the condition etc may jump to new or good or what have you and taxes may increase thereafter ... so cya that they are aware that tax may be different after you own it. Every area is different regarding property tax and rights etc - it may all be adding complication, but something to explore to see if its worth it...
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Old Mar 18th 2012, 1:48 pm
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Default Re: Buying a house - Taxes and Insurance

Sadly, someones snatched up the house from under our noses. Gutted
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