Property taxes are annual taxes assessed by your local government based on the property’s value. They fund schools, infrastructure, emergency services, and community operations. The important thing to understand is that property taxes vary significantly by location. Two similar homes in different counties can have very different tax bills. Taxes are part of your overall affordability equation — but they’re predictable and manageable when calculated correctly upfront. There’s also an important aspect regarding property taxes. Some properties will have zero property tax or in artificially low tax because the prior owner was totally disabled veteran or other reason that they were exempt or received heavily discounted property taxes.
Lenders will not calculate your payment based on the prior artificially low taxes, so Padzilly, based on the lenders underwriting practices, will include an estimated tax payment for qualification purposes because that’s the way it’s done in the real world. Yes the property taxes are zero, but your payment will include an estimated property tax based on its value. Many times, it is calculated between three-quarters of 1% or 1½% of the sale price. If we are using this alternate tax, it will show up in your payment breakdown and in OfferPro.
Please consult your Mortgage Advisor for guidance specific to your situation before making changes.
