In some cases, the actual property taxes on a home may not reflect what a new buyer will realistically pay. This can happen for a variety of reasons, including new construction, properties with special exemptions (such as those for seniors or veterans), or properties that have been assessed at a lower tax rate temporarily. For example, if a home was owned by someone with a tax exemption, the current property taxes may be far lower than what a new buyer can expect to pay.
To provide a more accurate estimate for qualifying purposes, Padzilly allows loan officers to set an alternate minimum property tax rate when the existing taxes fall below a certain threshold. This ensures that buyers are qualified using a more realistic estimate of their potential property tax obligations.
1. Low Tax Threshold: The loan officer sets a threshold for property taxes, typically as a percentage of the list price. If the actual property taxes are below this threshold, the alternate tax rate is applied.
Example: The loan officer sets a threshold of 0.30% of the list price.
2. Alternate Minimum Tax: When the actual taxes fall below the threshold, the system applies an alternate minimum tax rate, typically more in line with market averages, to provide a realistic estimate of taxes for qualifying purposes.
Example: If the actual taxes are below 0.30%, the system applies an alternate rate of 1% of the list price for qualification.
This feature ensures that buyers are evaluated on a more realistic basis, protecting against potential surprises down the road when property taxes increase to more standard levels.
For further details, please contact your loan officer or consult with local property tax authorities to get a clearer understanding of potential tax rates for your future home.
