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April 21, 2023

Understanding Property Taxes in Texas

Property taxes are an important source of revenue for local governments in Texas. These taxes are used to fund a wide range of public services, including schools, roads, and public safety. In this blog post, we will provide a comprehensive guide on how property taxes work in the state of Texas. We will cover topics such as how the tax rate is set, who sets the tax rate, how the appraisal process works with the county appraisal office, when taxes are due, how the protest process works to protest your property taxes, and what are the different types of taxes that make up your total tax rate.

 

How the Tax Rate is Set

 

The tax rate for a particular property is calculated by multiplying the property's assessed value by the tax rate. The assessed value is determined by the county appraisal district, which is responsible for appraising all properties within its jurisdiction. The tax rate is set by each taxing entity that has the authority to tax the property.

 

There are two main types of taxing entities in Texas: school districts and local governments. School districts are responsible for funding public education, while local governments are responsible for providing other public services, such as police and fire protection, road maintenance, and trash collection.

 

Each taxing entity sets its own tax rate, which is expressed as a percentage of the property's assessed value. For example, if the assessed value of a property is $100,000 and the tax rate is 2%, the property owner would owe $2,000 in property taxes.

 

Who Sets the Tax Rate

 

The tax rate is set by each taxing entity that has the authority to tax the property. In most cases, this includes the local government and the school district. However, in some cases, other special taxing entities may also be involved, such as a municipal utility district or a hospital district.

 

The tax rate is set annually, usually in the late summer or early fall, and is based on the budget for the upcoming fiscal year. The budget is developed by each taxing entity and outlines the anticipated revenue and expenses for the upcoming year. The tax rate is then set at a level that will generate enough revenue to cover the expenses outlined in the budget.

 

How the Appraisal Process Works with the County Appraisal Office

 

The county appraisal district is responsible for appraising all properties within its jurisdiction. The appraisal process is used to determine the market value of the property, which is the price that the property would sell for if it were on the market.

 

The appraisal process begins with the appraisal district collecting information about the property, including its size, age, and condition. The district may also consider other factors, such as the property's location and any improvements that have been made to the property.

 

Based on this information, the appraisal district will assign a value to the property. This value is used to calculate the property's assessed value, which is the value that is used to determine the property tax bill.

 

When Taxes are Due

 

Property taxes are due on January 31st of each year.

 

How the Protest Process Works to Protest Your Property Taxes

 

Property owners who disagree with the assessed value of their property have the right to protest their property taxes. The protest process is a formal process that allows property owners to challenge the assessed value of their property and, in turn, the amount of property taxes they owe.

 

The protest process typically begins with the property owner filing a written protest with the county appraisal district. The deadline to file a protest is May 15th, or 30 days after the notice of assessed value is mailed to the property owner, whichever is later.

 

Once the protest is filed, the appraisal district will schedule a hearing to review the assessment of the property. The hearing will be conducted by an appraiser or appraisal review board, which is a group of citizens appointed by the county commissioners court.

 

At the hearing, the property owner will have the opportunity to present evidence to support their claim that the assessed value of their property is too high. This evidence may include recent sales of comparable properties, appraisals from independent appraisers, or other relevant information.

 

After considering all of the evidence, the appraiser or appraisal review board will make a decision on the assessed value of the property. If the property owner disagrees with the decision, they may appeal the decision to the state district court.

 

It is important to note that property owners who choose to protest their property taxes must do so in a timely manner and follow all of the procedural rules. Failure to do so may result in the property owner forfeiting their right to appeal the assessment.

 

What Are the Different Types of Taxes that Make Up Your Total Tax Rate

 

There are several different types of taxes that make up a property owner's total tax rate in Texas. These include:

 

School District Taxes: School districts are responsible for funding public education in Texas. The school district tax rate is set by the local school board and is based on the budget for the upcoming fiscal year.

 

City or County Taxes: City or county taxes are used to fund a wide range of public services, including police and fire protection, road maintenance, and trash collection. The tax rate for city or county taxes is set by the city council or county commissioners court, respectively.

 

MUD Taxes: Municipal utility districts (MUDs) are special taxing entities that are responsible for providing water, sewer, and other utility services to residents in unincorporated areas of the county. The tax rate for MUDs is set by the MUD board.

 

Hospital District Taxes: Hospital districts are responsible for funding hospitals and other healthcare facilities in Texas. The tax rate for hospital districts is set by the hospital district board.

 

Conclusion

 

In conclusion, property taxes are an important source of revenue for local governments in Texas. The tax rate for a particular property is calculated by multiplying the property's assessed value by the tax rate, which is set by each taxing entity that has the authority to tax the property. The assessed value is determined by the county appraisal district, which is responsible for appraising all properties within its jurisdiction. Property owners who disagree with the assessed value of their property have the right to protest their property taxes. The protest process is a formal process that allows property owners to challenge the assessed value of their property and, in turn, the amount of property taxes they owe. Finally, there are several different types of taxes that make up a property owner's total tax rate in Texas, including school district taxes, city or county taxes, MUD taxes, and hospital district taxes.

 

Helpful Resources for Further Reading

 

Comptroller of Public Accounts: The Texas Comptroller of Public Accounts website provides a detailed guide on how property taxes work in Texas. It includes information on tax rates, appraisals, payment options, and the protest process. The website also includes a FAQ section that answers many common questions about property taxes in Texas.

 

Texas Appraisal Districts: Each county in Texas has an appraisal district that is responsible for determining property values for tax purposes. Many of these districts have websites that provide information on the appraisal process, as well as contact information for the district's staff. Homeowners can use these websites to find out more about their property's assessed value and to file a protest if necessary.

 

As always, reach out to us if we can assist you in any way.  Whether you choose to protest taxes on your own or choose to hire a professional service, we would be happy to help!

 

Links:

 

https://comptroller.texas.gov/taxes/property-tax/

https://mclennancad.org/

 

 

Posted in Homeownership
April 20, 2023

What will a lender need from me to get pre-approved on a loan?

When you're in the market to purchase a home, one of the first steps you'll want to take is to obtain a pre-approval for a home loan. A pre-approval is a letter from a lender that states that you are qualified to borrow a certain amount of money to purchase a home. Having a pre-approval letter in hand can give you a competitive advantage when making an offer on a home, as it shows that you are a serious buyer who has already been vetted by a lender. So, what does a lender require in order to issue a pre-approval for a home loan? Let's take a closer look.

 

Credit Score and History

One of the first things a lender will look at when determining whether to issue a pre-approval is your credit score and history. Your credit score is a numerical representation of your creditworthiness, and it ranges from 300 to 850. The higher your score, the better your chances of being approved for a loan. Lenders will also look at your credit history to see how you have managed your debts in the past. They will look for things like missed payments, late payments, and delinquent accounts.

 

Income and Employment History

Lenders want to know that you have a stable source of income and that you will be able to make your monthly mortgage payments. They will ask for documentation of your income, such as pay stubs and tax returns, to verify that you have a steady income stream. They will also look at your employment history to see how long you have been with your current employer and whether you have a history of changing jobs frequently.

 

Debt-to-Income Ratio

Lenders will also look at your debt-to-income ratio (DTI), which is the amount of debt you have compared to your income. They will add up all of your monthly debt payments, including things like credit card payments, car payments, and student loan payments, and divide that by your monthly income. This will give them a percentage that represents your DTI. Lenders typically want to see a DTI of 43% or less.

 

Assets and Liabilities

Lenders will also want to see a list of your assets and liabilities. This includes things like your savings accounts, investment accounts, and any property you own. They will also look at your liabilities, such as credit card balances and outstanding loans.

 

Property Information

In order to issue a pre-approval, lenders will also need information about the property you are interested in purchasing. They will want to know the address, the purchase price, and the estimated value of the property. They will also want to know if there are any liens or judgments against the property.

 

Once a lender has reviewed all of this information, they will be able to issue a pre-approval letter that states the maximum amount of money they are willing to lend you to purchase a home. Keep in mind that a pre-approval is not a guarantee of a loan, but it can give you a good idea of how much you can afford to spend on a home.

 

In conclusion, obtaining a pre-approval for a home loan requires a thorough review of your financial history and current situation. By understanding what lenders are looking for, you can prepare the necessary documentation and increase your chances of getting approved for a loan. If you're ready to start the process of obtaining a pre-approval for a home loan, contact us to let us connect you with a reputable and world class lender in the Waco area.

Posted in Buying a Home
April 18, 2023

What is an amortization schedule?

An amortization schedule is a table that shows the breakdown of each payment on a loan, including the amount of principal and interest paid, as well as the remaining balance on the loan after each payment is made. This type of schedule is commonly used with home loans to help borrowers understand how their payments are applied to the loan balance over time.

 

When you take out a home loan, your lender will calculate your monthly payments based on the loan amount, interest rate, and loan term. Each payment is composed of two parts: principal and interest. The principal portion of the payment goes toward paying down the amount you borrowed, while the interest portion goes to the lender as compensation for lending you the money.

 

In the early years of a home loan, the majority of the payment goes toward paying the interest, with only a small amount going toward paying down the principal. As time goes on and more payments are made, the amount of the payment that goes toward the principal increases, and the amount that goes toward the interest decreases.

 

An amortization schedule shows how each payment is divided between principal and interest, and how much of the principal balance remains after each payment is made. The schedule also shows the total interest paid over the life of the loan.

 

For example, if you have a 30-year fixed-rate mortgage for $300,000 at 4% interest, your monthly payment would be $1,432.25. In the first payment, $1,200 goes toward interest, while only $232.25 goes toward the principal. By the 12th payment, the amount going toward the principal has increased to $294.21, with $1,138.04 going toward interest. Over time, the amount going toward the principal continues to increase until the loan is fully paid off.

 

An amortization schedule is helpful because it allows borrowers to see how their payments are applied to the loan balance over time, and how much interest they will pay over the life of the loan. This information can be useful when deciding on a loan, as it helps borrowers understand the total cost of borrowing and how long it will take to pay off the loan.

 

Overall, an amortization schedule is an important tool for understanding how home loans work and can help borrowers make informed decisions about their borrowing options

Posted in Buying a Home
April 14, 2023

What is a short sale and how do you purchase one?

A short sale is a real estate transaction in which the seller is unable to pay off their mortgage, and the lender agrees to accept less than the full amount owed in order to avoid foreclosure. In a short sale, the seller's lender agrees to release their mortgage lien on the property and accept the proceeds from the sale, even though the amount may be less than what is owed on the loan.

 

If you are interested in purchasing a home being sold as a short sale, here are the steps you need to take:

 

Find a real estate agent experienced in short sales: It's important to work with an agent who has experience with short sales, as the process can be more complex than a traditional sale.

 

Obtain pre-approval for a mortgage: Before you begin looking at short sale properties, you should obtain pre-approval for a mortgage. This will give you an idea of how much you can afford to spend on a home and will also make you a more attractive buyer to the seller's lender.

 

Identify potential short sale properties: Your real estate agent can help you identify properties that are being sold as short sales. These properties are typically listed as such on real estate websites.

 

Conduct a thorough inspection of the property: It's important to conduct a thorough inspection of the property before making an offer. Short sale properties are often sold as-is, so it's important to know what repairs and upgrades will be necessary.

 

Submit an offer to the seller's lender: If you decide to move forward with purchasing a short sale property, your real estate agent will submit an offer to the seller's lender. The offer will include the purchase price, the terms of the sale, and any contingencies.

 

Wait for approval from the seller's lender: Once the offer is submitted, you will need to wait for approval from the seller's lender. This can take several weeks or even months, as the lender will need to review the offer and determine whether to accept it.

 

Complete the transaction: If the lender approves the offer, you can move forward with the transaction. You will need to sign a purchase agreement, provide a down payment, and complete all necessary paperwork.

 

It's important to note that purchasing a home being sold as a short sale can be a lengthy and complex process. The seller's lender has the final say in whether or not to accept the offer, and they may require additional documentation or negotiations before approving the sale. However, for buyers who are willing to be patient and navigate the process, short sales can provide an opportunity to purchase a home at a discounted price.

April 12, 2023

What are typical closing costs in a real estate transaction?

Purchasing a home can be an exciting and rewarding experience, but it can also be costly. In addition to the down payment and monthly mortgage payments, buyers are also responsible for closing costs. Closing costs are the fees associated with finalizing the purchase of a home, and they can add up quickly. In the state of Texas, typical closing costs can include surveys, appraisals, lender fees, title fees, and other costs.

 

One of the most significant closing costs in Texas is the survey fee. A survey is an assessment of the property's boundary lines and physical features, such as structures and easements. The purpose of the survey is to ensure that the property's legal description is accurate and to identify any encroachments or boundary disputes that could impact the buyer's ownership rights. In Texas, the cost of a survey can range from $450 to $800, depending on the property's size and complexity.

 

Another significant closing cost in Texas is the appraisal fee. An appraisal is an assessment of the property's value by a licensed appraiser. The purpose of the appraisal is to ensure that the property's purchase price is in line with its market value. In Texas, the cost of an appraisal can range from $400 to $700, depending on the property's size and location.

 

Lender fees are also an important closing cost to consider. These fees are associated with the mortgage loan and can include origination fees, processing fees, and underwriting fees. In Texas, the cost of lender fees can range from 1% to 2% of the loan amount. For example, on a $200,000 loan, the lender fees could range from $2,000 to $4,000.

 

Title fees are another significant closing cost in Texas. Title fees are associated with the transfer of ownership and include the cost of title insurance, title search fees, and other related expenses.   In Texas the title insurance rate is a set rate given by the Texas Department of Insurance and is a direct correlation to the price of the house.  

 

Other closing costs in Texas can include escrow fees, prepaid taxes and insurance, and recording fees. Escrow fees are associated with the third-party service that holds funds for the transaction. These fees can range from $300 to $500 in Texas. Prepaid taxes and insurance are payments made in advance to ensure that these expenses are covered for the first year of ownership. These costs can range from several hundred dollars to several thousand dollars, depending on the property's location and purchase price. Recording fees are charged by the county clerk's office to record the deed and other related documents. These fees can range from $100 to $200 in Texas.

 

It's important to note that closing costs can vary depending on a variety of factors, such as the property's location, purchase price, and the type of mortgage loan being used. Buyers should also be aware that some closing costs may be negotiable, such as the lender fees and title fees. In some cases, the seller may be willing to cover some or all of the closing costs as part of the negotiation process.

 

To help prepare for closing costs, buyers should ask their lender for a detailed estimate of all closing costs associated with the mortgage loan. This estimate, known as the Loan Estimate, will outline all fees associated with the loan and provide an estimate of the total amount of closing costs. Buyers should review the Loan Estimate carefully and ask their lender any questions they may have about the fees.

 

In conclusion, closing costs are an important factor to consider when purchasing a home in Texas. Typical closing costs can include surveys, appraisals, lender fees, title fees, and other costs. These fees can add up quickly and can significantly impact the total cost of purchasing a home. Buyers should work closely with their lender and real estate professionals to maximize every dollar they have in the purchase of their home.

April 10, 2023

Spotlight on Waco - Interview with Waco Mayor Dillon Meek

April 10, 2023

The Importance of a Home Inspection

Buying a home is one of the biggest investments that most people will make in their lifetime. With so much money on the line, it’s essential to ensure that the property is in good condition before finalizing the purchase. This is where a home inspection comes in.

 

A home inspection is an assessment of a property’s condition by a professional inspector. The inspector evaluates the home's major systems, including the roof, plumbing, electrical, and HVAC systems, as well as the foundation, structure, and other visible components of the property. The purpose of a home inspection is to identify any defects or issues that could impact the safety, functionality, or value of the home.

 

One of the main reasons why a home inspection is so important is that it can help buyers make an informed decision about their purchase. The inspection report provides buyers with a detailed understanding of the condition of the property, allowing them to identify any issues that may need to be addressed before closing the deal. This information can be used to negotiate repairs or a lower purchase price, or it may even cause the buyer to decide against purchasing the property altogether.

 

Another reason why a home inspection is essential is that it can uncover hidden issues that may not be visible to the untrained eye. For example, a home may have a leaking roof that is not immediately apparent, but which can lead to extensive water damage over time. Similarly, the electrical system may be outdated and pose a safety risk, or the plumbing may have hidden leaks that can cause mold or water damage.

 

A home inspection can also help buyers plan for future maintenance and repairs. By identifying issues early on, buyers can take proactive steps to address them before they become more significant and costly. This can include anything from replacing a worn-out HVAC system to repairing a cracked foundation.

 

In some cases, a home inspection may even save the buyer money in the long run. For example, if the inspection reveals that the home has an energy-efficient HVAC system or insulated windows, the buyer may be able to take advantage of energy-saving tax credits or rebates.

 

Finally, a home inspection can provide buyers with peace of mind. Purchasing a home is a significant financial and emotional investment, and knowing that the property is in good condition can help buyers feel confident and secure in their decision.

 

In conclusion, a home inspection is an essential part of the home-buying process. It can help buyers make an informed decision, uncover hidden issues, plan for future maintenance and repairs, and provide peace of mind. For these reasons and more, all homebuyers should strongly consider hiring a professional inspector to evaluate the condition of their potential new home.  Ask us today for a list of home inspectors in the Waco area we have personally used, vetted and trust with the needs of our clients, friends and family.

Posted in Buying a Home
April 7, 2023

Fixed Rate Mortage vs Adjustable Rate (ARM)

When it comes to financing a home, there are different types of mortgages available to borrowers. Two of the most common types of mortgages are fixed-rate mortgages and adjustable-rate mortgages.

A fixed-rate mortgage is a mortgage where the interest rate remains the same for the entire term of the loan. This means that the borrower's monthly mortgage payment will remain the same for the life of the loan, regardless of any changes in interest rates in the market. Fixed-rate mortgages are popular among homeowners who want stability and predictability in their mortgage payments, as they provide a consistent monthly payment that makes budgeting and financial planning easier.

In contrast, an adjustable-rate mortgage (ARM) is a mortgage where the interest rate fluctuates periodically based on changes in an index, such as the prime rate. The initial interest rate on an ARM is typically lower than that of a fixed-rate mortgage, making it an attractive option for borrowers who want to take advantage of lower rates. However, the interest rate on an ARM can adjust upwards or downwards over the life of the loan, which can lead to significant changes in the borrower's monthly mortgage payment.

The main advantage of an ARM is that it allows borrowers to take advantage of lower interest rates. However, this comes with the risk of the interest rate rising and causing the monthly payment to increase. Therefore, borrowers who opt for an ARM should have a plan in place for when their interest rate adjusts and should be prepared to potentially make higher mortgage payments.

In summary, the main difference between fixed-rate mortgages and adjustable-rate mortgages is the predictability of the borrower's monthly mortgage payment. A fixed-rate mortgage provides a consistent monthly payment, while an ARM can offer lower payments initially but can fluctuate over time. Ultimately, the choice between a fixed-rate mortgage and an ARM depends on the borrower's financial goals and risk tolerance.

Posted in Buying a Home
April 2, 2023

Spotlight on Waco at Coach's Smoke

Posted in Spotlight on Waco
April 1, 2023

Spotlight on Waco at Helberg BBQ

Posted in Spotlight on Waco