Real Estate

How will an increase in property taxes or insurance premiums effect my mortgage payment

The majority of buyers have an escrow account. This account collects money monthly so that when the property taxes and insurance is due the lender will pay the bill. I think this is smart. Especially since property taxes are due in December just in time for Christmas.
Taxes and insurance may increase or decrease over time. As these costs change so will the necessary amount needed in your escrow account. When taxes or insurance premiums increase they cause a shortage in your escrow account. The lender will perform a yearly escrow analysis to determine if you have enough money in your escrow account to pay your taxes and insurance. To do this they take your yearly tax amount plus your yearly insurance premium divide it by 12 and then add a certain amount as a cushion. Each year you will get a statement from the county regarding your property taxes. Do not simply look at it and throw it away. Go back and look at what you paid last year in property taxes. If the amount has gone up significantly, call the lender. You will need to either pay the difference (shortage) into your escrow account or have the lender recalculate an increase in your escrow account immediately. This will cause your payment to go up but may be significantly less than if you wait for the next escrow analysis. If you simply throw the notice away and do nothing you are going to have a large increase in your mortgage payment next year. How much more you ask? Well if your taxes went up $240 a year, this would cause a shortage of $20 a month. The lender will need to collect the shortage plus an additional amount for the anticipation of the paying this new amount again next year. If your escrow analysis is later in the year, you could have a larger shortage meaning your payment could increase $40-$60 a month. Now think if both your taxes and insurance increased, your payment could really increase. Of course with insurance you can always call around and look for cheaper insurance, not so with taxes.
My advise would be to compare your taxes and insurance premiums each year and be proactive. I personally prefer to pay the difference and have my payment remain more consistent.

If you need a realtor to buy or sell I would love to help you. Please feel free to call me at 405-213-2992

Real Estate

Property Taxes Increasing?

Did your property taxes go up? Mine did and significantly. Property taxes increase because of two things, valuations and the millage rate. Property values have been going up in Oklahoma for the past several years. The citizens of Oklahoma voted in 1996 that the tax assessor could not increase valuations more than 5% per year, so even if a property increased 10% in a certain year, the valuation would not increase more than 5% thus holding done property taxes. In 2013, the people voted to change the increase allowed to only 3% per year provided the property was homesteaded. If the property was not homesteaded it could continue to increase by the 5% maximum. The exception would be when a property changes owners at which time the property is to be assessed at fair market value. See below:

“Despite any provision to the contrary, on and after January 1, 2013, the fair cash value of any parcel of locally assessed real property shall not increase by more than five percent (5%) in any taxable year; provided, if such property qualified for a homestead exemption or is classified as agricultural land, any increase to the fair cash value of such locally assessed real property in a taxable year shall be limited to three percent (3%). The provisions of this section shall not apply in any year when title to the property is transferred, changed, or conveyed to another person or when improvements have been made to the property.” Treasures office

The valuation of a property is only part of the equation on figuring your property tax amount. The millage rate is the amount per $1000 used to determine the tax amount. If the millage rate goes up your taxes will go up even if the valuation stays the same. Example: The millage rate for the City of Moore rose from 116 in 2015 to 128.22 in 2016. Now multiply that by an increase in valuation and you can have a large increase in property taxes. You could easily see a 10-25% increase in property taxes.
The reason for the increase in millage rate for Moore in 2016 is bonds that were voted in by the residence of Moore. It could also be costs incurred by the city which cause property taxes to go up.
If you have a mortgage with an escrow account and your property taxes increase, your mortgage is going to go up. So what should you do? I will address this question in my next blog.

If you are looking for a Realtor to help you buy or sell that cares and is looking out for your best interest, call me Sandi Walker 405-213-2992. I would love to help you.