CHAPTER 5 HOW LOWER TAXES LET YOU BUY MORE HOUSE FOR THE SAME MONTHLY COST This chapter is often the moment where things click for homeowners. Once you see how taxes influence monthly affordability, everything becomes clearer. Many people think that moving to a better town or a larger home will automatically cost more. But in New Jersey, that is not always the case. Sometimes, moving to a better town will cost you less. How Lenders Look at Monthly Payments When a lender evaluates your ability to buy a home, they look at your total monthly payment, not just your mortgage.
Your total cost includes: • Mortgage principal • Mortgage interest • Property taxes • Homeowner’s insurance • Condo or HOA fees if applicable
If a town has high taxes, your lender may approve you for a smaller mortgage because your monthly payment balloons when taxes are included. If a town has lower taxes, your monthly payment shrinks, increasing your buying power.
A Real Example of How This Plays Out Let us say you currently pay: • $30k per year in taxes • That is $2,500 per month 24
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