DesPortes: Only two certainties in life
EAGLE COUNTY, Colorado Death and taxes are the only two certainties in life, they say. Eagle County property owners can attest to this fact as real estate property taxes have gone up. Now, it is time to pay the tax man, and 2007 real estate taxes are due by June. Other than the burden of more money out of your pocket, a tax increase such as this presents a few other frustrations or hurdles to overcome.If you currently escrow or impound for your taxes (pay your taxes each month with your monthly mortgage payment), your current mortgage payment, or the tax portion of it, is going to increase to ensure that there are ample funds in the escrow account to pay the taxes. Theoretically, this should be a simple calculation by the lender; however, it does not always work this way. A lender may collect more than what you calculate to be the necessary monthly amount and in some cases may also ask for a lump sum to be paid relatively soon to make up a shortage. These adjustments and payments depend on how much the taxes went up, how much is currently being collected and how much is in the existing escrow account.Escrow re-calculations can be tricky. By law lenders can only hold so much in the account. With a fairly dramatic tax increase as experienced in Eagle County, there may be significant shortages in existing tax escrows that will have to be paid. Dont hesitate to call and speak with the tax escrow department with your current lender if you are confused as to the change in your monthly payment or the amount due in a lump sum, because mistakes can be made.Furthermore, such increases in taxes can potentially affect a borrowers ability to qualify for either a refinance or purchase loan. Loan guidelines have become stricter over the past year, and lenders now pay more attention to a borrowers ability to repay the debt on a monthly basis. Lenders do this by a meticulous calculation of debt-to-income ratios. If the ratios are over a certain percentage, the loan will be denied. An increase in monthly taxes owed certainly has the ability to take some borrowers over the acceptable ratio level.Tax increases affect us first and foremost in our pockets, but they can present other frustrations and hurdles past the payment aspect. Communication is of the utmost importance if this scenario applies to you. William A DesPortes is a managing member DesPortes, Selig & Associates, Professional Mortgage Services. He can be reached at 970-926-9393 or email@example.com.
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