Ah, the dreaded tax bill — the necessary evil of purchasing a home. While it’s not a favorite topic of conversation, it’s important to understand how it can affect the borrower’s qualifications during the home loan process and how you can be of assistance to them after they purchase their home.
Taxes and Qualifying for Loans
Taxes in Illinois are a year behind. This means that taxes being paid today are actually for the time period one year ago. Taxes are paid in two installments, but vary in how this is calculated by county (most are split evenly with Cook county as the exception).
When the new bills come out, lenders are required to use this information to calculate the monthly tax obligation, regardless if it’s higher or lower from the previous year’s bill. With Cook county’s bills just released, it’s important to double check to ensure there will not be any adverse effect to the borrower’s qualification.
After Closing Opportunities
Once the home is sold and closed, each county handles the way a homeowners exemption is added to to the tax bill. Many counties (such as DuPage) automatically add, while others (such as Cook), require the homeowner to apply online or in person. There are several other exemptions they may be eligible for, like senior exemptions or freezes, so doing a little research upfront may provide even more opportunities to save.
This process provides you, as an agent, an excellent opportunity to reach out to your past clients and offer a review of their current tax bill to ensure the proper exemptions have been applied to the bill and what steps to take if they haven’t. This is a great exercise to do when working with potential sellers who may be entitled to a refund, as well as give them the opportunity to correct the bill and provide a potential buyer a lower property tax bill, making their home more attractive.
Our loan officers at Key Mortgage are well versed in reviewing tax bills for the appropriate exemptions and how they are treated during the loan qualification process. Reach out to a Key Mortgage LO to see how you can work together today!