Property Taxes & Interest Rates: An Update

Property taxes and interest rates are two of the greatest concerns for homebuyers and home sellers today. And understandably so. So let’s dig right in…

There are many real estate analysts and economists who are predicting that property tax rates here in the DFW area will be leveling off or perhaps even lowering over the next couple of years.

Dave Lieber of The Dallas Morning News is one such person…

The Watchdog: Why property taxes are going up when they should be going down

Frisco ISD voters showed us the Texas property tax rebellion led by surly homeowners is as real as your swelling tax bill. The school district appeared to hold most of the cards. Teachers trolled for votes on social media. A “Back-to-School Bash” was held at one high school that served as an early voting polling place.

In addition, Texas politicians have committed to working at property tax rate cuts across the board…

Taxed-out Texans seek property tax relief

Skyrocketing property taxes make some Texans fear they’ll someday be taxed out of their own homes. As this concern ricochets through the state, some North Texas leaders talk about the need to consider cutting taxes to avoid gouging homeowners.

Texas Senate approves, again, bill to limit local property tax hikes

The Texas Senate on Monday approved legislation that would require cities, counties and special government districts to get voter approval for property tax rate hikes of 4 percent or more. Current law allows residents to petition for a tax ratification election for increases of 8 percent or more.

That is incredibly encouraging!

One thing to remember in our area is that each city has its own tax rate. We can look at the numbers and even use tools like SmartAsset to calculate property tax rates for various properties in various cities to see the difference to your bottom line.

We must remember, too, that here in Texas we don’t pay state or local personal income tax. We’ve had people relocate to our area tell us they don’t mind paying property taxes because it is still cheaper than the income taxes, and state & local taxes they paid in their previous states. One final savings here in Texas is that we do not pay a residential real estate transfer tax. We are only one of 12 states in the country without this tax.

But what about interest rates? Are rates going to increase? (That’s the eternal question, it seems.) The best people to answer are the specialists over at Benchmark Mortgage. Tom Sherman and his team will give you the straight scoop and guide you and your family to the best mortgage package for you.

When it comes to interest rates, in a January 5, 2017, article in Forbes entitled, Stressed Over Higher Interest Rates?, Lawrence Yun, highly-respected Chief Economist of the National Association of REALTORS®, provides an excellent overview and forecast for interest rates for this year and beyond.

He shares:

So in the first week of 2017, the borrowing rate on a 30-year fixed rate mortgage averaged 4.2%. Taking a look back, let’s recall how high rates were in the distant past. In the 1970s, they averaged 8.9%; in the 1980s, 12.7%; in the 1990s, 8.1%; and in the first decade of the new century they came in at 6.3%. The in-and-around 4% rate is only a recent phenomenon from the year 2011 to today. Nonetheless, many consumers with a short-term memory, especially among the young, have often witnessed sub-4% rates and the latest rising rates feel financially discomforting and discouraging.

For a typical home priced now at $235,000 and mortgage borrowing in the amount of $200,000, the monthly payment would be $898 at a 3.5% mortgage rate, while it goes up to $978 at 4.2%. If rates were to reach 5%, then the monthly payment would rise to $1074. If the rates were to reach to the 1980s level, then the monthly payment shoots up to $2166. Such is only a hypothetical and unlikely. At most, mortgage rates may rise to 6% by the end of 2018. My forecast is for 4.5% to 4.8% by the end of the year and 5.5% by the end of 2018.

Kiplinger’s latest predictions on mortgage rates look to be holding true as well:

Long Rates to Stay Low

Kiplinger’s latest forecast on interest rates Long-term interest rates should rise a small amount by the end of the year, but the lack of pickup in inflation, and continuing economic and fiscal policy uncertainties will likely limit the increase. This should still be the case even when the Federal Reserve raises short-term rates or limits its securities purchases.

Are you concerned? Worried? Uncertain about what to do when it comes to property taxes or interest rates? Let’s sit down over a cup of coffee and talk things out.  We will be honest and forthright. Get your real estate questions answered and rest assured that we will help you do what makes the best sense for you and your family.


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