A recent research revealed that moving to a house with an additional bedroom or bathroom could cost extra dollars to be added to your mortgage payment every month. It’s understandable because improvements like additional bedrooms and bathrooms boost a home’s resale value. Depending on where the property is located, these extra dollars may be cheap or steep.
Mortgage Payment Rises With Each Bedroom, Bathroom
In U.S. metropolitan areas, the average cost of an upgrade to a three-bedroom home is $447 more to be spent for the monthly mortgage payment, according to Zillow’s research. Compare this to a one- to two-bedroom home where $192 in extra dollars are to be spent for the mortgage’s monthly amortization. The more bedrooms, the more extra dollars to be shelled out.
Results do vary where the home is located. For instance, a two- to three-bedroom home in San Jose, CA will cost $2,224 more but not in Cleveland, OH where the same upgrade is just $74 away.
You are also likely to spend more on homes with more bathrooms. On an average, a two-bedroom home with a bathroom or two demands $434 on top of your mortgage payment.
To buy a three-bedroom home having two to three bathrooms will cost $549 extra; add one more bedroom to that home and you’ll add $588 to your monthly payment. A home with an equal number of four bathrooms and bedrooms costs an extra $838 every month.
If you’re looking to stretch your budget, you might start looking outside California.
Adding a Room = Additional Taxes
It’s not just buyers who had it rough for buying a home with more than two bedrooms, sellers had to pay more in taxes as a result of adding a room to their homes. This is because any improvement in your home’s appraised value will increase its assessed value which together with the property tax rate forms the basis of your property taxes.
Depending on your state laws, it might take the next tax year or when the home is sold to feel the pinch of a reassessment and a higher tax bill on your property.
Some have contemplated on keeping mum about the improvement to avoid getting hit by higher taxes. But it’s hardly advisable because you need to secure a building permit before doing any improvement so everything goes by the community and building standards.
It’s one thing to advertise your home’s many bedrooms and another to be reported by the local assessor for not filing the necessary paperwork. This could unduly ruffle the sale process.Click to See the Latest Mortgage Rates»