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Can a mortgage lender calculate pending property tax exemptions into a loan?

My husband and I recently were pre approved for a mortgage loan. We qualify for a veteran and homebuyers property tax exemption, but found out that the taxes on the property we are looking to purchase are overassesed (9K and counting) and no exemptions have been claimed over the past 5 years. In essence,the taxes are too high for our lender to qualify us for a mortgage. Is there a way to have the exemptions considered prior to obtaining a true mortgage thru our lender? Or is there a way to start the appeal process before purchasing the home. Thanks for any help
  • March 29 2012 - Chicago Heights
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Answers (3)

The lender will not adjust the escrows based on exemptions that haven't already been applied.  How much does a 9K reduction of assessed value reduce the annual tax payment? 

I run into this several times especially on REO properties where the borrower gets a steal and the purchase price is well under assessed value but unfortunately the borrower had to qualify with the taxes on the property at the time. They get a gift in the form of a refund check from the bank on the excess taxes collected but not until the new tax bill is issued.
  • March 29 2012
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Profile picture for Ofe Polack
I am a bit confused.  You are saying that the property is "overassessed" sorry to tell you but there isn't such a thing.  The assessed value is what it is.  Once you purchase the property you may want to request an abatement, but I wish you good luck on that, sometimes the abatements are ridiculously low, if any. You may want to go to the assessor's office and see what they have to say and have them put it in writing to take to your lender.   Having said that, you may need to do is to improve your credit profile or find a property with lower taxes.
  • March 29 2012
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Every lender has their own set of guidelines.  Most cities won't 'do the math' for you to document the lower taxes until you move in.  Even then it can take a few months.  Call the city tax assessor and see what they say.

1. See if you have a debt you can pay off to bring your debt ratio down so you qualify.  Your lender should be able to tell you what to do.
2.  Many lenders do not consider a debt to exist if there is 10 payments or less due. Ask about that if it applies. 
3.Can you put down a larger deposit so the loan amount is lower? 
4.Ask your lender for a better rate. It can't hurt.  Shop rates and see if you can shave off some money that way too.

There are several different ways to restructure your loan. If your mortgage person is experienced, they should know what is allowed.
  • March 29 2012
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