28% DTI - High Property Tax States vs Low Proper tax states

[kags1969]

So I live in Texas and the property tax rate is 2.15%, I have a friend who lives in another state that has income taxes but low property taxes - 0.88%.  When calculating PITI, we in Texas have much less borowing power because the high state property taxl.

Example:

Purchase house in Texas - 300K

PI - 1799.00 x 12 = 21,588

Taxes - 537.50 x 12 = 6,450

Insurance = 1,000

Total = 29,038

Income Required to qualify = 103,700 x 28% = 29,036

Purchase same home in low property tax state ~ New mexico ~ 0.9%

PI - 1799 x 12 = 21,588

Taxes - 220 x 12 = 2,640

Insurance = 1,000

Total = 25,228

Income Required to qualify = 90,200 x 28% = 25,256

So in Texas I need to make $13,500 more per year to qualify for the same amount vs Texas.  This seems to tilt a little lending a little to states with state income taxes.   

Do lenders take things like this into consideration, or is it just too complicated to consider state income tax and sales tax rates to get the idea of the true cost to live in a particular state?

Thanks for your thoughts.

[DallasLoanGuy]

As far as I know.... This is not addressed by the Automated Underwriting engine.

Texas should have an income tax and lower our rent(tax) we pay the govt

[Anonymous]

Whether a state has state income taxes or not doesn't dicate property taxes.

I just moved from Vegas with no state income taxes and their property taxes are on average 1/2 of Austin, where I now live and plan to buy.

[MattH]

---

@kags1969 wrote:

So I live in Texas and the property tax rate is 2.15%, I have a friend who lives in another state that has income taxes but low property taxes - 0.88%.  When calculating PITI, we in Texas have much less borowing power because the high state property taxl.

Example:

Purchase house in Texas - 300K

PI - 1799.00 x 12 = 21,588

Taxes - 537.50 x 12 = 6,450

Insurance = 1,000

Total = 29,038

Income Required to qualify = 103,700 x 28% = 29,036

Purchase same home in low property tax state ~ New mexico ~ 0.9%

PI - 1799 x 12 = 21,588

Taxes - 220 x 12 = 2,640

Insurance = 1,000

Total = 25,228

Income Required to qualify = 90,200 x 28% = 25,256

So in Texas I need to make $13,500 more per year to qualify for the same amount vs Texas.  This seems to tilt a little lending a little to states with state income taxes.   

Do lenders take things like this into consideration, or is it just too complicated to consider state income tax and sales tax rates to get the idea of the true cost to live in a particular state?

Thanks for your thoughts.

---

If you think taxes are high in Texas, you should move to Connecticut -- high property taxes AND an income tax.  Just to make my joys complete, my town reassessed right at the height of the bubble

[DallasLoanGuy]

---

@Anonymous wrote:

Whether a state has state income taxes or not doesn't dicate property taxes.

I just moved from Vegas with no state income taxes and their property taxes are on average 1/2 of Austin, where I now live and plan to buy.

---

because vegas has other revenue sources.

 

[BrianB_The_Loan_Professor]

Have you seen the difference between what 200k will buy you in TX and what it will buy you in other parts of the country?

 I personally think the higher taxes create a more stable housing market.

You dont see crazy appreciation/depreciation (at least TX didnt)

[Anonymous]

Yes, Vegas has the gaming revenue to offset other rates (this was mentioned in my first post that timed out and didn't go through)

The way I see it, living in Austin, it is worth every extra penny in property taxes to own here because you get trees and land (something that 3x's the P/I in Vegas buys) 

Like others have mentioned there are "gives" and takes", but in the right place worth every penny!

Can everyone tell how excited I am getting towards buying my first house?!?! 

[kags1969]

I live in and love Austin, but there are hoods here that have doubled in the last 4-5 years, and I just wonder if once the recession sets in, we will see some of the depreciation that lots of the US has seen. 

Having lived in Texas most of my life, RE in Austin is expensive when compared to the rest of Texas.... especially if you want to live close to downtown.

[Anonymous]

BUT worth every penny!!!!!!!

This is why I moved here!...There was a recent article that named Austin #1 and San Antonio as #2 for the best cities to stretch a dollar!!!

I grew up in PA which makes Texas Property Taxes look little.

I love the Spicewood Springs/360 area, but can't afford, however the Williamson County is more affordable (and as you know only miles from the Arboretum)...and seems to be my choice pick.

Trust me when I say that Austin is so unbelievably fabulous compared to Cincinnati, Philly, Vegas, Phoenix and LA!!!

Message Edited by 1111mel on 10-15-2008 11:35 PM

[ShanetheMortgageMan]

Austin does look like a real nice town.  Too small for me but definitely in the nicer looking part of the state.