How far do your responsibilities as a buyer's agent go when helping a first-time buyer get qualified for a comfortable monthly payment?

While some buyer's agents let lenders help pick the top magic number, other agents show a little more guidance.

One fact that you could choose to share with your buyer is that fixed rate doesn't mean house payments never change. This is especially useful information for the first-time homebuyer who may not realize that while their mortgage rate is fixed, insurance and property taxes can skyrocket. Without this knowledge, they may fail to make the budgetary wiggle room for rising house payments.

There's reason to make this a concern. The National Association of Realtors just announced that home prices across the country are rising at record rates, with the exception of a few metros. Last year, home prices rose over five percent, and typically only just beat the normal inflation rate of about 3 percent annually. This year they are averaging 8 percent. In some metros, home prices are rising at outlandish rates of 25 percent or more.

Depending on the time of year the home is purchased, and when the taxing authority issues its estimates to homeowners, your buyer could be impacted with higher assessments within a few short months of buying a home. If the buyer is buying at the top of his or her ability, an unexpected couple of hundred extra dollars a month could be painful, especially if the lender fails to escrow the right amount in time, and has to escrow an even larger amount to make up the shortfall by the time taxes are due to be paid.

In Texas and California, many homeowners were just slapped with a 45 percent increase in insurance premiums due to heavy losses by certain underwriters in the state. Carriers with "national" policies spread those costs throughout the nation, making rate changes less noticeable, but homeowners are vulnerable to frequent or annual changes in premium rates by many carriers. When some policies renew, homeowners may be told that coverage for some items that they thought was included is now optional, and can only be included at a higher cost.

That's why warning buyers that large jumps in insurance and property taxes are far from unprecedented is only prudent. As you know, many buyers wait until they are in the home to remodel and to make major purchases they wanted to keep off their credit reports while qualifying to buy a home. Escalating house payments are particularly unwelcome while they are stretching their resources to make the home liveable and attractive.

So what can you do?

• When helping your buyer figure PITI, or using the lender's estimate, remind the buyer that the PITI is calculated on what the current seller is paying in taxes this year, and that the new assessment will be based on the new sales price that the buyer paid for the property

• Be aware of property tax laws for your city and county, as well as their current rates

• Know your area's ceiling on tax rate increases so you can inform your buyer of the maximum possible hikes there might be for the next couple of years if home prices continue to rise

• Stay informed on insurance issues that affect your state

• Know which insurers are insuring in your area, and which ones aren't writing homeowner policies

• At tax appraisal time, (usually six months before taxes are due) have directions on your Web site, or newsletter on how to protest tax appraisals in your area.

• Offer to supply current comparables to your buyer if they ever need them for tax protesting purposes. Put a reminder in your contact management software to include the offer in your auto-mailers

While telling your buyer more than they know to ask isn't required, it could certainly go a long way with the buyer in terms of resales and referrals when he or she remembers your kindness in letting them know about some expenses they weren't counting on.

Published: May 21, 2002

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