Existing Homeowners May be Facing Higher Payments
May 16, 2022
As a current homeowner, you may be basking in the consolation that you bought before the market got crazy with higher prices and interest rates. However, it doesn’t mean that you may not be facing higher mortgage payments for next year.
Most homeowners pay their taxes and insurance into an escrow account with their mortgage payment. The lender monitors the account to be sure there are enough funds available when the taxes and insurance are due. If there is a shortage, it could cause your payment to increase.
In 2021, the national average increase in home prices was just under 20% but may have been considerably higher in some local markets. The increased value of homes doesn’t just affect buyers; it can affect the assessed value of properties across the board resulting in their property taxes going up.
Various taxing authorities, like state, city, school, and other special districts, can establish the rate they charge and exemptions that apply. In most situations, there is a state assessment procedure for establishing the value subject to tax.
When the assessment is published, there is usually an opportunity for the owner to challenge the value. The owner can submit evidence to justify lowering the assessment like comparable sales that indicate a lower value, mistakes in the size of the improvements or lot size, or possibly, deteriorated condition of the property.
There are companies who will represent sellers in the effort to lower the assessment. Typically, they may charge a flat fee and a percent of the property taxes saved by lowering the assessment. This particular year, some assessed values have gone up as much as 35-40% and it may not seem fair, but it really does accurately reflect market value.
Start investigating your situation as soon as you are notified of this year’s assessment. In most cases, the owner can represent themselves in the matter, but they will need to accumulate accurate, comparable sales, not use automated value models found online.
Your real estate agent is able to provide you a list of comparable sales.