When you’re shopping for a home, bear in mind that the asking price only tells part of the story.
The PITI ratio — the amount you’ll pay toward principal, interest, taxes and insurance — provides a window into your ability to afford a home.
Lenders prefer that your PITI — or front-end ratio — take up no more than 28 percent of your gross monthly income.
You should also be aware that your property taxes provide you with less of a tax-planning boon under the Tax Cuts and Jobs Act.
The overhaul of the tax code increased the 2018 standard deduction to $12,000 for single filers ($24,000 for married filing jointly), eliminated personal exemptions and curtailed itemized deductions, including a new $10,000 cap on the state and local tax deduction.
As a result, fewer people will be itemizing deductions on their taxes, and those with the largest property tax bills can only write off some of the amount.
“Property taxes are something every homeowner will face,” said Croll. “It’s important to understand how they work and that they are a recurring cost.”
Source : CNBC
