## Understanding property taxes + more

When buying a home, there’s a lot of numbers and terms to process and consider. It’s my goal that this post will help demystify some of these figures and terms.

One of those numbers that appears on every closing statement is Property Taxes. Closely related is the Tax Levy rate, a long series of numbers used to calculate the Property Taxes due. Like all taxes, these monies help fund local governments, cities, schools, public safety, etc. and will be collected at closing, based on the purchase price of the home.

These big, long numbers seem cumbersome and difficult to understand, but there is simple math to solve this puzzle. Simply move the decimal point two places to the right and round up.

The Ada County Levy Rate for Edington is 005374801 = .54%, just a smidge higher than half of one percent. This is one of the lowest Levy Rates in the Treasure Valley.

Homeowner Exemption: As an Idaho Homeowner, you get the benefit of getting a Homeowners Exemption on your primary residence (the home you own and live in). Shortly after you close on your new home, you will want to file the Homeowner Exemption with the Ada County Assessor’s Office. Title One recommends that you file this paperwork within two weeks of closing on your new home. This paperwork is linked here.

Again, the State loves to make it complicated. Here’s a way to make it easier to calculate the exemption on your new purchase; \$125,000 is the maximum exempted value.

Here in Edington, the average sale price is approximately \$430,000. Using that example, see below:

\$430,000 Purchase Price – \$125,000 Exemption = \$305,000 Assessed Value

\$305,000 Assessed Value x .54% Levy Rate = \$1,647 per year (or \$137.25 per month)

This amount is the “T” in P.I.T.I or “Monthly Mortgage Payment” when talking mortgage lender lingo. (Again, keeping it simple, we are talking about a 30-Year Conventional loan w/ a 20% down payment). This acronym stands for:

P = Principal (amount borrowed)

I = Interest (amount you pay for borrowing the money, this is determined by the interest rate of the loan)

T = Property Taxes (see above)

I = Homeowners Insurance (just like a car, when you borrow money to buy a house, the lender says you must have insurance)

You can use any mortgage calculator online to estimate the principal and interest, and for homeowner’s insurance a good rule of thumb is to plan for \$75/month.

Hope this helps you estimate your payment on your future home purchase. As always, I like to keep things at grammar school level, so I can understand them. That being said, we highly recommend you seek out a qualified Home Mortgage Lender to get more detailed numbers as you navigate your way to being a new homeowner. We can recommend a lender, if you like.

Our onsite team is happy to help, too, so always feel free to reach out anytime. Thank you for taking the time to read this post.