Different Situations for Every Borrower

By Andrew Augustyniak

Estimated Tax Rate

The mortgagee must use accurate estimates of month tax escrows when calculating the total Mortgage Payment.  In cases of new construction and manufactured homes converting to real estate, the tax estimates must be based on the “land and improvements”. Below are tax rates we use for new construction properties in different states:

  • AZ     – Arizona -1%
  • CA- California – 1.25%
  • UT – Utah – 1%
  • OR – Oregon – 1.676%
  • TX – Texas – 2.941%
  • WA – Washington – 1.25%
  • CO- Colorado – 1.08%
  • NB – Nebraska – 2.02%
  • WY – mill rate

An individual may also provide 3 “closed” sales showing the fully accessed taxes in the subject’s development to use an average of the amount proven for qualifying purposes.

What Is Property Tax Abatement?
Some cities have property tax abatement programs that eliminate or significantly reduce property tax payments on a home for years or even decades. The purpose of these programs is to attract buyers to locations with lower demand, such as areas of the inner city that are in the midst of revitalization efforts. Some cities offer tax abatements citywide, while others only offer them in designated areas. Some cities limit these programs to low-to-middle-income property owners, but many programs have no income restrictions. You can buy a property that already has an abatement, or you can purchase an eligible property, make the required improvements, and apply for the abatement yourself. The former option is considerably easier because it means someone else has endured the headaches of construction and bureaucracy and all you have to do is move in. Here are just some examples of actual property tax abatement programs in the United States. There are, however, many other tax deductibles for homeowners.

  • Condominium Utility Expense -The portion of the condominium fee that is clearly attributable to utilities may be subtracted from the HOA fees before computing qualifying ratios, provided you can obtain proper documentation , such as statements from the utility company.
  • Paid Utilities -Some homeowner’s associations also provide utilities. In buildings with shared mechanical systems, you may find that your association dues include your heat, air conditioning and hot water service. Sometimes, your water, sewer and garbage are also included in your association dues as well. On occasion, an association will even provide cable television or internet service.

Non – Arm’s Length Transactions…..What is required?

  • Must be disclosed in the purchase contract
  • Must be addressed in the Appraisal
  • Must provide letter regarding relationship
  • 2 month satisfactory mortgage rating on the current owner
  • Desk review may be required per Investor overlay

Quick Tips:

  1. Be aware that you will be asked to get most of your financial documents
  2. Pre-Qualifications take between a few hours to a few days depending on the borrower and borrower cooperation in gathering documents, investors with multiple business and properties usually take longer
  3. Be diligent in gathering your documents, don’t be lazy and drag it out!
  4. Don’t get mad at your Loan Officer, it’s not his fault.
  5. Let go of the past, we are not in 2007 anymore

.“Growing our business, one satisfied customer at a time”