Providing home loan mortgage financing in Lake, Geauga, Mahoning, Columbiana, Erie, Sandusky, Seneca, Wyandot, Putnam, Hancock, Ottowa, Fulton, Williams, Henry, Defiance, and many more Ohio counties.
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Providing home mortgages in Findlay, North Ridgeville, Highland Hills, Beachwood, Moreland Hills, Ashtabula, Rock Creek, Delaware, Franklin, Brunswick, Geauga, Grafton, Lorain, Green, Bath, Sandusky, Port Clinton, Huron and many other Ohio communities.
Providing mortgage financing in Cleveland, Cincinnati, Toledo, Bowling Green, Columbus, Akron, Canton, Avon, Strongsville, Avon Lake, Solon, Dayton, Medina, Wooster, Youngstown, Alliance, Mentor, Elyria and many other Ohio cities.

Property Taxes Explained

There are many, many misunderstandings and misconceptions about property taxes. Very often, property taxes are the reason your actual closing statement look different than your Good Faith Estimate.

Property Tax, also known as "ad valorem", is based on the value of property. It is used to partially fund the expenditures of local governments including school districts and for a State's bond debt redemption. Property Tax is paid by all owners of land and buildings, or any other improvement permanently affixed to the land.

If you choose to impound taxes, depending on which month you close it can greatly affect your closing costs (California). Depending on the month there is a requirement that the lender will have to withhold. For example if you close in February they will withhold one month of taxes versus if you close in July they will withhold 6 months.

It is important to stay up on your Property Taxes. Refinance loans can sometimes be held up, due to Property Tax liens that the homeowner was unaware of.

When purchasing a property, review the preliminary title report carefully. Look for any special tax districts. Some of these, water districts for example, pass repair and improvement costs on to taxpayers, so your property taxes can vary significantly.

One thing to keep in mind is that when you refinance your home, the lender will normally require any property taxes that are due within 90 days of the funding of the loan to be paid. These taxes will normally be paid through the proceeds of the loan by the settlement agent at closing. If you want to pay them outside of the loan it is best to pay them to the settlement agent rather than paying the tax collector. Your mortgage professional can explain why this will help expedite the closing of your loan.

You want to make sure there are no back taxes due on a property when you are considering purchasing. This is especially important in states where there are options for no escrow.

Each state handles property taxes differently. In California for example there is proposition 13. This makes the homeowner responsible to pay taxes for the purchase price of the property. Regardless on how much the home appreciates they will only pay taxes on value at the time of purchase.

You may have the choice as to whether or not to escrow your property taxes. If you elect to pay the taxes yourself, your lender may charge you a slightly higher interest rate.

The taxable value of real estate is the basis of secured property taxes. Property taxes are calculated by multiplying the property's taxable value by the tax rate for the area where the property is located.

Example: $300,000 (taxable property value or assessed value
x 1.5% (tax rate for area)
= $4,500.00 (property taxes)

Property Tax is prorated at the closing table between the home buyer and the home seller. If the seller has paid the full tax amount for the entire year, the buyer has to reimburse the seller for the remainder of the year. If the seller owes real estate tax in the year, then the seller reimburses the buyer for the period the seller has occupied the property.

Some lenders may not disclose the property taxes on their good faith estimates for various reasons. One reason is that escrows are typically not known until you settle on a closing date.


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