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Buying a Home: Lessons Learned

By Matthew Wilcox, LINC Ambassador

Rent versus buy. It’s an age old question that people have asked for centuries and will continue to ask. Home ownership is part of the American dream and provides many benefits, along with some headaches at times (“Honey, when are you going to replace that water heater?”) In most circumstances, buying a home just makes more sense, especially if you are going to live in it for at least five years. This was the advice one realtor gave my wife and me when we bought our first home. I believe it still holds true today.

Let me start by stating this: Pennsylvania taxes are just flat out weird.  My wife and I moved from D.C. in April of 2016 to the Lehigh Valley and immediately discovered that tax collectors still exist. We thought that profession died out after the Biblical days. In all seriousness, after settling in to the area, we came to realize that what we initially thought was weird was actually a better way of accounting for things, like school taxes. 

Here's the real lesson on taxes when buying a home: make sure to discuss with your realtor AND lending officer about all the current taxes owed and future taxes.  My wife and I were hit with a $4,900 school real-estate tax bill right before Christmas claiming we were late. The bill included a 10% penalty. Needless to say, we were furious.  My first thought was: “The previous owner already paid that.  It was collected at closing, right?”  Wrong. I found out that the realtors who did our closing didn’t bother to explain to us the way PA does taxes in the Lehigh Valley. 

Make sure at closing that everything is explained to you, documented, signed, written in blood. If your closing date is close to the start of a billing tax cycle, ask that it be collected at closing even if the lending officer and closing agent aren’t required to collect it. Ask these questions: What tax bills should I expect to pay each year? When will I receive those bills? Who will they be coming from? 

Rent versus buy. You can certainly skip the tax headache with renting, but you lose that wonderful mortgage interest deduction by renting. Owning a home is so much more than taxes, though. It is truly the American dream. Happy house hunting!

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