Taxes and Other Expenses
It's easy to focus on the price of buying a home and forget about the additional expenses of living in a certain neighborhood. But those costs should be an important factor in your decision, since they can often be quite high. If you're moving into a country club development or a condo, you may be responsible for pricey homeowner's association fees. And these fees come with rules as well, so you'll want to understand those completely before making a decision. If the association forbids parking motorcycles in your driveway, for example, and you happen to own two of them, then it's definitely something you need to consider.
Property taxes are another significant cost might overlook -- especially if they are escrowed and you pay them as part of your mortgage payment each month. Because property taxes are based on the value of your home, they can increase, which can change your monthly payment if you escrow. Be prepared for increases and make sure your budget can handle the higher payment. On the flip side, in a declining housing market, your taxes can decrease, but that could mean less access to good public services, as well. Parks, libraries and police are usually the first public services cut when the city's budget decreases [source: Levin].
Finally, if you get a great deal on a foreclosure, but it's just within your budget, property taxes could push those payments out of your reach when the market starts to turn around again. The value of your house will increase and so will your property taxes. Just keep that in mind when you're considering foreclosures.