It’s back-to-school season and we can’t think of a better way to get into school spirit than by discussing the importance of looking for good school districts during the home buying process.

The fact of the matter is that many buyers don’t even know school districts should factor into their decision, but they absolutely should. School quality is an integral part of a neighborhood, with a substantial impact on home prices and property values. So, where do we start?

The importance of a good school district

You might be surprised to learn that, when it comes to value, it’s not all about the ratio of bed to bath or square footage. With or without children, lots of buyers intentionally choose to buy homes in quality school districts. For some, it’s because they want a good education within walking distance for current or future children. For others, a good school district can be a sign of a healthy local economy and real estate value.

In 2017, the National Association of Realtors (NAR) found that nearly one quarter of buyers considered the quality of local schools when house hunting. Of course, families rarely stay put forever. Jobs change, children grow up, and when it comes time to sell, people want to know their home has retained or increased in value. Realtor.com found homes in higher-performing districts received 26% more views than the average listing. Even more surprising? Those homes were 42% more popular than homes in lower-ranked districts, which brings us to our next point…

School district impact on home prices

Many factors play into home prices, and a school district’s quality is just one of them. On one hand, sellers understand that a good district is more desirable, so they might use it as leverage for higher asking prices. On the other hand, if you’re a buyer and a good school district is one of your must-haves, you might be willing to bid higher to snag the right home. On average, people were willing to pay $50 more per square foot for a home in top-ranking school districts compared to homes in average districts, according to Redfin.

Other buyers might also be willing to trade some of their “wants” if it means securing a spot in a top district. After all, what’s more important: your bonus-room-turned-craft station, or a dependable school district with all the resources a child could need?

Even for buyers who aren’t parents yet, it’s something worth thinking about. Either way, it’s a trade off and it’ll come down to what you value most. And speaking of value…

School district impact on property values

Higher home prices and higher test scores often mean higher property values. Higher property values usually equate to higher property taxes, a portion of which tend to trickle down to local school districts. In a roundabout way, this is why higher-quality schools with higher test scores tend to be located in more affluent areas: more funding from the community.

Some sources even suggest that properties in better school districts hold up during various crises. Take the past housing crisis, for example. One study from Ken Corsini of BiggerPockets found that, between 2006 and 2009, “properties near schools with a rating of four or five stars were almost completely insulated from declining values, while those near schools with one to three stars experienced massive losses in value.”

That tells us that a neighborhood’s equity can serve as a buffer during challenging market conditions.

Not the most important factor

Children or not, every buyer should take the school district into consideration. But that doesn’t mean it needs to be your top priority. The right home for you is the one that feels right at the time. When that day comes, you can count on us to help you get there faster.

A good rule of thumb to keep in mind when you’re home shopping: wherever you buy, you’re buying into the local school district.

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Is a pool good or bad for home resale?

Some buyers might consider a pool more of a liability than a luxury. If your home has a swimming pool, it may be a feature that deters a family with small children or pets who don’t know how to swim.

You’ll also want to consider the true cost of a swimming pool, both for you as the homeowner installing it and for the potential buyer maintaining it. As a homeowner, it could cost you more than $50,000 to install, equip, and fill an inground pool. Maintenance costs could raise your utility bills each month, the chemicals could cost you hundreds during swimming season, and you may also want to increase your liability coverage on your homeowner’s insurance.

When is it a good idea to install a pool?

Adding a pool could increase your home’s value if:

• You live in a warm climate
• The style of your pool fits the neighborhood (and meets HOA regulations)
• Most homes in your market have pools
• You know you’ll keep up with maintenance
• Your lot is big enough for a lawn and a pool
• You plan on selling to buyers who would prefer a pool, like families with teenagers or empty nesters who host grandkids often.

Often, it’s all about location. Do you live in an area that appeals to the kind of buyers you want? Is there a good spot on your property for a pool? Does your HOA have strict specifications regarding pools? Ultimately, only you can make the call as to whether or not a pool is right for your home.

So, does a pool increase home value?

The truth is, whether or not a swimming pool adds home value is determined by a number of factors—the answer depends on your homeownership goals. But, when it comes time to sell your home, the right real estate agent can help you market your pool to buyers who will love your pool as much as you do. And if you’re staying put, take a dip for us. We’re not jealous or anything.

The post Does a Swimming Pool Add to Home Value? appeared first on Cardinal Financial.

We’ve said it before, but it’s often cheaper to buy than rent. But once someone becomes a homeowner, they may come to find that there are some new things they have to pay for. Things they didn’t have to worry about when they were renting. Like property taxes. But this added expense shouldn’t scare people away from buying a home just yet. There’s a little thing called a homestead credit that’s intended to lighten the burden of property tax payments.

It’s just another benefit that can help make homeownership affordable. A homeowner who pays property taxes on their primary residence might want to consider taking advantage of this program. However, not all homeowners are guaranteed to save money via the homestead credit program or to even be eligible for it. It’s best for a homeowner to start by contacting their local government and research the homestead credit rules specific to their individual situation.

The homestead credit is just another perk to homeowners and another benefit that can help make homeownership affordable.

let’s get down to the PITI-gritty

Before we get into the details of the program, let’s talk about PITI. Four things make up a mortgage payment: principal, interest, taxes, and insurance (abbreviated PITI). The principal and interest pieces of that equation concern the home loan. The borrower pays the insurance part to their homeowners insurance company. Then there’s taxes. This part of a monthly mortgage payment goes toward property taxes—that’s where the homestead credit comes in.

homestead credit for dummies

“Homestead” is just an old-fashioned word for a home—more specifically, a homeowner’s primary owned residence. In the U.S., the homestead tax credit law limits the amount of tax assessment increase that can be imposed on homeowners. The program is currently available in 47 states, six of which have unlimited exemption. Other states limit it to a percentage or a fixed amount.

The homestead credit may protect at least some of a home’s value from creditors, property tax increases, and even life events like the death of a spouse by putting a cap on the assessment increase for a period of time. This credit (also called homestead tax credit or homestead tax exemption) can have a significant impact on how much homeowners save on property taxes, regardless of their property value or their income level.

home values 101

Let’s take a step back for a minute. The amount a homeowner pays for property taxes is based on factors that impact their home’s market value. When home values rise, property taxes usually do so too.

One major factor that can affect a home’s value is home renovations. And not just renovations a homeowner makes to their own home, but those their neighbors make to their homes too. Picture Homeowners A and B. Let’s say Homeowner A builds an addition onto their home. This not only increases the value of Homeowner A’s home, but Homeowner B’s too, and that of the whole neighborhood. Making improvements around the house can increase the home values in the surrounding neighborhood. And it can increase the property taxes of the area as well.

Local demands can also affect home values and property taxes. Since property taxes often fund public services in the community like public schools or parks, homeowners in the area could pay higher property taxes to support these local establishments. Similarly, if there’s a lot of real estate investing going on in the area, homeowners might have to pay more in property taxes to help fund those initiatives.

Making improvements around the house can actually increase the value of the surrounding neighborhood.

All about tax assessments

Did you know that property taxes are assessed every so often? The frequency of this depends on a homeowner’s local government. However, they can be reassessed annually, every five years, or only when the home is sold or refinanced. The local government assesses property taxes based on an assessment rate (also called a mill levy) set by the state. But just what is evaluated when a piece of property is assessed for taxes?

An official tax assessor will compare the market value of the home to similar properties in the area. The home’s worth will then be determined by the amount that those similar, nearby properties were recently appraised or sold for. If home renovations and local demands are on the rise, the property taxes could go up. This is where the homestead credit program can cap the property assessment increase for a period of time to give the homeowner a financial break.

The homestead credit can cap the property assessment increase for a period of time to give the homeowner a financial break.

homeownership has its perks

Homeowners across the country save money and benefit from the homestead credit. The application process helps verify that the property owners only receive the benefit of this credit on their principal residence. In addition, once a person submits the application, homestead credit eligibility stays in place as long as the home for which they’re applying remains their primary residence.

While there are different rules and processes for every state, the overall benefit remains the same: homeownership has its perks. And saving money on property taxes using the homestead credit is one of them. If there’s money to be saved, it can’t hurt to do some research and consider filling out an application. Savings via the homestead credit is not guaranteed to every homeowner, so it’s important to talk to your local government or visit your state’s .gov website to find out if you’re eligible and where to apply.

This blog post is intended for educational purposes only and is not to be taken as advice or as a guarantee of savings. Consult your financial advisor or legal counsel before you make any financial decisions toward purchasing a home or applying for the homestead credit.

Did you learn something new about the homestead credit from this blog post? Give us a shout-out on social media!

The post Homeowners Catch a Break with the Homestead Credit appeared first on Cardinal Financial.