Cannot Afford Property Taxes

What To Do If Homeowners Cannot Afford Property Taxes

Gustan Cho Associates are mortgage brokers licensed in 48 states

This BLOG On What To Do If Homeowners Cannot Afford Property Taxes Was UPDATED On March 4th, 2019

What If Homeowner Cannot Afford Property Taxes:

Every homeowner has to pay property taxes. Homeowners who own home free and clear, property taxes must be paid.

  • Homeowners insurance is optional for homeowners who own their property free and clear
  • However, all lenders will require borrowers to have homeowners insurance
  • All property taxes will be part of housing expenses for homeowners whether they have a mortgage or not
  • There is no set formula on property taxes
  • Every county has different property tax rates
  • For example, a 3,000 square foot home on one acre in Springfield, Illinois, property tax can be $2,000
  • The same 3,000 square foot home on an acre of land in Beverly Hills, California can be $40,000 per year
  • Property taxes vary from county to county and state to state and is mainly based on the assessed value of the property
  • The higher it is assessed, the more the county will charge for property taxes

Basics On Property Taxes

Property taxes are a secured claim against the subject property.

  • It is not attached to the homeowner and it does not go on a credit report if homeowners are late on property taxes
  • Homeowners cannot be criminally liable for not paying property taxes
  • In the event if a property goes through foreclosure with back property taxes at the time of the sheriff’s sale, the delinquent property taxes stay with the property and homeowner will no longer be liable for the delinquent property taxes

Delinquent Property Taxes: Cannot Afford Property Taxes?

Property taxes can increase year after year and sometimes the property tax increase can be substantial where it will affect the homeowner’s ability to pay them.

  • The county is not allowed to start foreclosure proceedings immediately if you owe the county back property taxes or are behind on property taxes
  • Most states require that the property needs to be in default status for a minimum of five years before the county can start foreclosure proceedings
  • If you are behind your property taxes or had a substantial property tax increase and can no longer afford your housing payment due to the tax increase, there are some options available to you

Property Tax Hikes: Cannot Afford Property Taxes

Homeowners who recently had a substantial property tax hike and that hike are affecting the ability to make monthly mortgage payments, there are several options.

  • The first option is to immediately contact mortgage lender where they can do a workout or loan modification with current mortgage loan so it can be affordable 
  • This may be extending the term of a current mortgage loan or lowering mortgage rate
  • The lender may also pay the back due property taxes in advance and work out a payment plan through mortgage escrow

Property Tax Appeal: Cannot Afford Property Taxes

Homeowners can also see if they can do a property tax appeal.

  • Check to see what neighbors are paying for property taxes or check to see what similar properties are being taxed for within a one square mile radius
  • If similar and like properties like are being taxed less, homeowners can do a property tax appeal with the county
  • This should be done regardless of whether they can or cannot afford the property taxes
  • Another option is to enter into an installment plan of redemption which is a 5-year property tax payment plan that allows a homeowner to repay property taxes in arrears in five separate installments
  • Homeowners need to check with their lender whether they will allow such a repayment agreement for paying property taxes in default
  • County might also have special property tax reduction plans for seniors, disabled, and blind homeowners

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