When purchasing a new home in Texas, many factors exist, including property taxes and mortgages. As a homeowner, it is essential to understand the relationship between these two crucial aspects of homeownership.

Understanding the nuances and costs of taxes and monthly mortgage payments in Texas is critical to making informed financial decisions as a homeowner. It means it's important to note that these taxes are not automatically included in your mortgage payment. Homeowners in Texas are responsible for paying property taxes separately.

In this blog post, learn the truth about property taxes in Texas and discover what you need to know to make informed decisions about your finances.

What is Property Tax in Texas?

Property tax is a type of tax that homeowners in Texas must pay on the value of their real estate property. In Texas, property tax is the principal source of revenue funding for local governments, including cities, counties, school districts, and other special districts.

The local tax rate for property tax in Texas is determined by each local government and can vary widely at the county and local level depending on the location and type of property.
Property tax rates are typically calculated as a percentage of the appraised value of the property, which is determined by a local government appraisal district. The funds generated from property tax are used to fund local services such as schools, roads, public safety, and other essential community programs.

In Texas, property tax is a significant financial obligation for homeowners, and it's important to understand how it works and determine how it affects your income and your finances.

So, Are Property Taxes Included in Mortgage in Texas?

Property taxes in Texas are not typically included in your monthly mortgage payment. However, it is common for homeowners in Texas to set up an escrow account with their mortgage lender to make the required monthly payments for their taxes and insurance. This allows the lender to pay them on the homeowner's behalf when they become due.

Escrow accounts can help homeowners budget for and pay their property taxes and ensure they are paid on time to avoid penalties and interest.

It is important to note that the responsibility for paying taxes ultimately rests with the home or property owner, regardless of whether an escrow account is established with their mortgage lender.

When is The Deadline for Paying Property Taxes in Texas?

Property taxes are due upon receipt of the tax statement. Tax collections typically begin around October 1st, and taxpayers have until January 31st of the following year to pay their property taxes.

Failure to pay property taxes by the deadline will result in penalty and interest charges, which start to accumulate on February 1st on most unpaid tax bills.
Property owners in Texas need to be aware of the property tax payment deadline and make timely property tax payments to avoid incurring any penalties or interest charges.

What Happens if Property Taxes Are Not Paid?

In Texas, failure to pay property tax can result in accumulating penalties and interest over time. The longer the taxes remain unpaid, the more significant the penalties and interest will become. It is important to note that if your property spans multiple counties, you will receive separate appraisal notices from each county appraisal district to pay taxes.

If the property taxes remain unpaid, the penalties and the interest rate will accrue in all the respective counties, and the consequences can include the imposition of a tax lien, tax foreclosure, or even the loss of the property.

Property owners in Texas should pay their property taxes on time to avoid incurring any penalties or interest charges.

Tips for Managing Property Taxes in Texas

Managing property taxes in Texas requires understanding the calculation process, budgeting effectively, exploring available exemptions, monitoring assessment notices, considering payment options, keeping organized records, seeking professional guidance when needed, and staying informed about any changes in tax laws. By following these tips, homeowners can successfully navigate their property tax responsibilities and make informed financial decisions.

If you have any questions about your mortgage or setting up an escrow account for your property taxes, call Ebenezer Mortgage Solutions at (813) 284-4027.

What are the Property Rights Under the Texas Constitution?

The Texas Constitution includes five basic rules for property taxes in the state. These rules are intended to provide guidelines for how property taxes are levied and collected and to ensure that the system is fair and equitable for all property owners. The five rules for property taxes in Texas are:

Equal and Uniform Taxes

Taxation must be equal and uniform. Property taxation is fair and consistent, ensuring that no single property or type of property is overburdened with taxes.

Property taxes are based on the assessed value of the property owned, which must be determined through a uniform appraisal process. This ensures that all property owners are treated equally and that property taxes are distributed fairly.

Uniform appraisal is essential to ensuring that property owners pay an appropriate amount of taxes based on the true value of their property, allowing for an equitable and just system of property taxation in Texas.

Taxes Based on The Current Market Value

Property taxes are levied based on the current market value of the property. This value is determined based on the price the property would sell for if both the buyer and seller were seeking the best price, and the tax rate if neither were under pressure to buy or sell.

However, the Texas Constitution does provide for certain exceptions to this rule. For example, agricultural and timberland may be taxed based on "productivity values," which is the value of the land's agricultural or timber production rather than the average tax rate of its sale value. This can result in lower tax bills for owners of such land.

A Single Appraised Value for Each Texas Property

Every property in Texas must have a single appraised value. This means that all local governments responsible for property tax collection in Texas must use the same value for a given property, and cannot assign different values to it.

To ensure consistency in the assessment of property values, county appraisal districts in Texas are responsible for determining the assessed value of properties. This guarantees that all property owners in Texas are treated fairly and equitably, regardless of which local government they pay property taxes to.

Only Federal or State Law Exempts Property from the Tax

All property is subject to taxation unless it is explicitly exempted by federal or local tax rates or state law. Such exemptions can exclude all or part of a property's value from being taxed.

It is important to note that exemptions may vary based on the type of property, its use, or the owner's qualifications. These exemptions are established to ensure that property taxes are applied fairly and equitably across all properties in Texas.

Notice of Increase in Property Value Appraisals

In Texas, property owners have the right to receive reasonable notice of any increases in the appraised value of their property. This notice provides property owners with an opportunity to review the appraisal and challenge it if necessary. The notice also includes information on how to appeal the appraisal and the deadlines for doing so.

By providing property owners with notice of any such deductions or increases in their property's value, Texas ensures that property taxes are applied fairly and equitably, and property owners have the opportunity to contest any discrepancies in calculating their property's assessed value.

How Property Taxes Are Calculated in Texas

In Texas, property taxes are calculated based on the appraised value of the property and the tax rate set by local taxing authorities. The process involves determining the appraised value of the property, applying any eligible exemptions to reduce the taxable value, and multiplying it by the tax rate to calculate the annual property tax. Homeowners need to understand this calculation process to effectively budget for their property tax obligations.

Understanding Property Tax Exemptions in Texas

In Texas, property tax exemptions are available to eligible property owners, allowing them to reduce the taxable value of their property. The most common exemption is the homestead exemption, which applies to a homeowner's primary residence. Additional exemptions include those for disabled veterans, elderly homeowners, and agricultural properties. To claim exemptions, property owners must file the appropriate applications with their local appraisal district. It's important to understand the limitations of exemptions and notify the appraisal district of any changes in eligibility. Seeking guidance from the appraisal district or a tax professional can help homeowners navigate the process and potentially save on property taxes.

Have More Questions About Your Property Taxes? Call Ebenezer Mortgage Solutions!

If you're a Texas homeowner and want to learn or find out more about property taxes and mortgages, contact us at Ebenezer Mortgage Solutions to learn more about property taxes in Texas, including how they are calculated, when they are due, and what happens if they are not paid on time.

At Ebenezer Mortgage Solutions, we understand that navigating the complexities and cost of property taxes and homes can be overwhelming, which is why we're here to offer you help.

If you have any questions about a home loan or need assistance with your mortgage or to set up an escrow account for your property taxes, give us a call at (813) 284-4027.
Our team of experts is ready to assist you and ensure that you are set up for success as a Texas homeowner.

The government created USDA loans to help low-to-moderate-income families become homeowners. Backed by the United States Department of Agriculture, this loan program offers 0% down payment, has low-interest rates, and doesn't often require private mortgage insurance. But although USDA mortgages have flexible borrower qualifications, you have to meet certain requirements to be eligible.

Interested in getting a Texas USDA loan? This article will show you the steps you need to know to qualify for the USDA Rural Development loan program.

Step 1: Choose a Property in an Area Eligible for USDA Programs

One of the most important requirements in a USDA loan is whether or not a property is located in an eligible rural area. USDA's definition of eligible rural areas is not as restrictive as it sounds. This is because a 'rural area' consists of a mix of:

• Expansive rural landscapes;
• Small towns with a population of less than 2,500; and
• Urban areas range in population size from 2,500 to 49,999 and are not classified as part of a larger metropolitan labor market.

You can check out our other blog to know which areas are eligible for a Texas USDA home loan.

Moreover, USDA loans can only be used to purchase a primary residence. You cannot use it to fund a second home, vacation house, or an investment property.

In addition to being a primary residence, the property must also meet the following criteria to be eligible for a USDA loan:

• Accessibility: The property must be reachable through a road, street, driveway, or any other suitable route, with no obstructions that may hinder access to the home.
• Functional heating, cooling, and electric systems: All home systems, including major appliances, must be installed, operational, and safely wired.
• Structural integrity: The foundation of the house should be free of significant cracks or moisture issues, with sufficient life expectancy to last the term of the loan, and beyond.
• Adequate roofing: The roof must have a minimum of two years' worth of life left, with no visible holes, leaks, or missing shingles allowing water penetration into the house.
• Access to water supply and plumbing: The plumbing, water supply, and waste removal systems must be functional and up-to-date.
• Functional doors and windows: All interior and exterior doors must be installed and functional, while windows must be in good condition, without cracks, leaks, or visible mold.

Step 2: Qualify for a USDA Loan Based on Your Income

The primary aim of USDA loans is to assist low-income borrowers in purchasing a home. To fulfill this objective, the USDA mandates that lenders verify if the applicant's household income doesn't exceed 115% of the median household income in their area.

As of 2023, the standard income limit for most counties in the United States is $103,500 for 1-4 member households and $136,600 for 5-8 member households. Income limits may vary depending on the location to accommodate the cost of living.

To determine income eligibility, the USDA measures the annual household income which includes the income of the applicant and all adult household members, regardless of whether they are on the loan.

Lenders use historical data, such as W2s and current pay stubs, to project household income for the next 12 months. They also take into account gross income including salary, overtime, tips, commission, bonuses, and other forms of compensation for services.
However, certain income categories are never counted towards the USDA loan income limit. This includes earned income from a minor, an adult full-time student over $480, and tax credit.

Step 3: Check for County Loan Limits in Texas

Effective in 2022, the USDA loan limit for most counties in Texas is $336,500. This doesn't mean that you'll receive all of this amount, however. The loan amount that you'll be approved for will still depend on your ability to repay it.

To know the specific loan amount for your county, you can refer to page 86 of the official USDA Area Loan Limit document.

Step 4: Check Your Credit Score

To qualify for a USDA home loan, most approved lenders require a minimum credit score of 640. Nevertheless, the USDA itself does not set a minimum credit score, so applicants with scores below 640 may still be eligible for a USDA-backed mortgage.

If your credit score is below 640, manual USDA underwriting will be necessary. However, you may be able to compensate for your credit score by having a low debt-to-income ratio, substantial savings, or other financial strengths that reduce your risk as a borrower.

Steps 5: Check for Other Requirements

Here are other key eligibility requirements that you must prepare for the USDA loan program.

• Citizenship: You must be a U.S. citizen, non-citizen national, or permanent resident alien.
• Debt-to-Income Ratio: Total monthly debt payments, including the proposed new mortgage payment, must be at least 43% or lower of the gross monthly income.
• Acreage limits: There are no standard acreage or lot limits, but the amount must be common for the area.
• Property types: Detached, attached, PUD (planned unit development), modular, condos, and manufactured homes are eligible for USDA home loans, while farms and income-producing properties are not.
• Seller contributions: The seller of the home cannot contribute more than 6% of the sales price.
• Gift funds: There is no limit to the amount of gift funds you can receive from family members to help with the purchase of your USDA loan property.
• Appraisal: To ensure that the home you want to purchase is appropriate for the loan amount and meets the USDA standard, a home appraisal by an independent third party is required.
• Guarantee Fees: USDA loan borrowers are required to pay an upfront guarantee fee of 1% and an annual fee of 0.35%, which is divided into 12 monthly payments.

Contact Ebenezer Mortgage Solutions to See if You Qualify

Interested in getting a Texas USDA home loan? Ebenezer Mortgage Solutions can help. Contact us today at (813) 284 - 4027 to get pre-approval or to see if you qualify!

As a homeowner, it can be difficult to choose between paying off your mortgage early or putting money into your retirement savings account first. But for some people who already spent years settling their monthly payments, a mortgage might feel like a heavy weight that they want to get rid of as soon as they can. If you're one of these people, this article is for you as we'll be covering tips on paying off your mortgage early.

Make Extra Payments

Making an extra mortgage payment can help accelerate your payoff process. But before doing so, make sure that there is no prepayment penalty.

Prepayment penalties are fees charged by mortgage lenders when you pay off your mortgage early. Not all mortgages have a prepayment penalty. But if yours does, you would have agreed to it upon closing.

There are two methods you can use to make extra payments on your mortgage; either you make biweekly payments or put extra monthly payments against your principal.

Biweekly Mortgage Payments

The first method is to pay half a mortgage payment every two weeks. With this approach, you'll make 26 half-payments which equals 13 full monthly payments each year instead of just 12. This method hardly makes a difference in the monthly budget, which makes it easier for some homeowners to follow. And if done right, biweekly mortgage payments can help you save more in mortgage interest over the life of the loan.

But before proceeding with making extra payments, ask your mortgage lender first whether they accept biweekly payments. If not, you can opt to just set aside your biweekly payment amount and combine them into a single payment each month. It might not be as convenient as a regular biweekly payment method, but the benefit of having an extra annual payment is still there.

Extra Monthly Payment

The other method is to make extra mortgage payments against the principal balance each month. Just like biweekly payments, making additional payments on your principal can help reduce your interest payments.

Adding more to your monthly mortgage payment is often a better method than refinancing if you're not able to get lower interest rates. Making extra payments might also make more sense if you're already well into a 30-year mortgage.

If you plan to choose this method, check with your lender to confirm that your extra payments are applied on reducing your principal balance and not your interest rates. You'd also want to ensure that your lender fully understands that the extra payment is not for next month's mortgage payment.

Refinance Your Mortgage

Mortgage refinance will require more thought compared to making extra payments. This is because refinancing has associated expenses. And if you're not careful, these costs might outweigh the savings that you hope to get.

If you plan to refinance in order to pay off your mortgage early, do so only if you can get a lower interest rate or a shorter loan term.

A shortened loan term, which puts you on the path of an early mortgage payoff, can also help lower your interest payments. However, refinancing to a shorter-term loan will mean higher monthly payments which might stretch your budget too thin if you're not ready.

Mortgage Recasting

The next method is called mortgage recasting. This method for paying off your mortgage early is just like the previous approach where you make extra payments. But instead of doing it every month or per year, you make one large lump sum payment toward your mortgage principal, typically more than $10,000. Once your lender receives the lump sum payment, they will then adjust your amortization to reflect the new balance.

Although you'll still have the same loan term and interest rate, recasting will lead to lower monthly payments which can save you money. If you use those savings to make larger monthly payments, you will be able to pay off your mortgage early.

However, recasting your mortgage may require a fee of a few hundred dollars. Moreover, recasting doesn't apply to both FHA and VA loans.

Round Up Your Mortgage Payments

Rounding up your mortgage payments is another method to help you reduce your mortgage term faster. How this works is instead of paying just the exact mortgage payment amount, you round it up to the next $100. For example, instead of paying just $769, you round it up and pay $800 instead. Or instead of just $850, you pay $900.

Use Unexpected Income

Lastly, you can opt to send any financial windfall immediately to your lender. This could be from a tax refund, bonus from work, inheritance, funds from a sale, or any unexpected influx of cash.

If you're working with a mortgage servicer, make sure to specify that this lump sum payment goes toward your principal balance only. If you're not sure how such lump sum payments work, you can always check with your servicer.

Need Help With Your Mortgage?

Whether you're a first-time homebuyer or planning to refinance, the mortgage process can be overwhelming. But working with a mortgage broker from Ebenezer Mortgage Solutions will not only give you a stress-free process, but it can also help you get an approved mortgage faster.

Let Ebenezer Mortgage Solutions help you get the mortgage program that suits your needs and situation best. Call us today at (813) 284 - 4027 to start.

Refinancing your mortgage means paying off or renegotiating your current mortgage and replacing it with a new one. Often, this new mortgage has a better loan term and rate, which can then lead to a lower monthly mortgage payment and more savings.

However, just like with a regular home loan, the mortgage refinance process can be lengthy. And taking your time to provide your mortgage lender with the necessary documentation can increase the timeline even further. So if you're planning to have a streamlined mortgage refinance, then you need to be prepared.

What documents are required to refinance a mortgage? To help you out, this blog will go over some of the documents you'll need for a smoother refinance process.

Proof of Income

Lenders will want assurance that you can make your monthly mortgage payments, manage your existing debts, and still have enough cash left for your day-to-day living expenses. Your income documents will verify how much income you get and the stability of your earnings.

For Employed Borrowers

Salaried employees typically receive tax forms and pay stubs from their employer. These documents can serve as proof of regular income. If you don't have a copy of these on file, you can contact your human resources department. Here is a list of documents you need for a refinance as a salaried employee:

• Last two years' worth of W-2 forms
• Previous 30 days' worth of pay stubs
• 1099s if you have a side income
• Bank statements on all accounts from the previous two months
• Signed personal federal income tax returns from the previous two years or a signed IRS Form 4506-T
• Names, addresses, and contact details of your employers from the last two years
• If you have an employment gap or you were employed for less than two years, you have to provide a written explanation as to why.

For Self-employed Borrowers

Self-employed workers can include business owners, freelancers, and independent contractors. And since they don't have employers who will provide them with pay stubs or W-2 forms, they need to show other types of documents to verify their income. Here are some of the documents lenders might require from self-employed borrowers:

• Personal federal tax returns from the last three years
• Business federal tax returns from the last three years
• Year-to-date profit and loss statements
• Last two months' worth of personal and business bank statements
• List of all business debts and monthly payments
• Potentially a Fannie Mae Form 1084 for cash flow analysis

Insurance Information

Mortgage lenders would require your insurance information to verify the legality of your homeownership. This information will also show whether you've maintained the coverage on your home.

Title Insurance

Your title insurance policy is meant to protect you from losses that might occur if ever the title to your property is not free or clear of defects. This document, along with a copy of the deed with the names of all legal owners, will be one of your refinance requirements. Moreover, your title insurance can also help verify your property taxes.

You can find your title insurance policy in your closing documents. If you've lost them, you can ask the title company or your previous lender if they have a copy on file.

Homeowners Insurance

Your homeowner's insurance policy is used to help you rebuild your property in case of destruction or damage. And just like homeowners insurance is required when you're obtaining a loan, it will also be necessary when you're applying for a refinance.

To ensure that the coverage on your home is current, your mortgage lender will ask for a copy of your homeowner's insurance. The lender might also order a home appraisal. This is to verify that your homeowner's insurance policy coverage is still sufficient. And if it's not enough, you will have to work with your insurance company to update the coverage limits.

Credit Verification

Your credit score is probably the most important three-digit number in your adult life. It will be used to determine how well you handle your debts. Your lender will also ask your permission to pull your credit report so they can check your debt balances and see if there are any negative credit events. They might also ask for additional documentation to help with the credit checking:

• Bankruptcy discharge papers if there's bankruptcy in your credit history
• Explanation letter for any derogatory items on the credit reports such as late payments or collections
• Payment history statements for phone, car insurance, public utilities, and other expenses.

Statements of Debts

Your lender would want to determine if you can afford a new home loan. To do this, they would have to calculate your debt-to-income ratio by checking all your existing debts and expenses. These are some of the documents lenders will require to verify your financial obligations:

• Recent mortgage statements on your current loans
• Recent billing statements for home equity loans or lines of credit
• Recent monthly statements related to student loans, credit cards, car loans, or any other account listed on your credit reports
• Any other debts that are not listed on your credit reports

Statement of Assets

Your lender would want to verify whether you have enough cash to cover the closing costs on your new mortgage, as well as cash reserves that can cover at least 2 to 12 months' worth of monthly payments in case of an emergency. To do this, you'll have to provide recent statements from:

• All bank statements for checking and savings accounts
• Retirement accounts
• Brokerage accounts
• Certificates of deposit

Extra Documentations

You might also need to prepare additional documents depending on your lender. For example, if there's a recent large deposit made on your account, you'll have to explain where that came from. Here are other examples of additional documentation that might be asked of you:

• Documentation for child support
• Documentation for alimony payment
• Documentation for discharged bankruptcy
• Explanation letter for gaps in employment history or previous credit problems
• Gift letter and other related paperwork
• Proof of rental revenue for any investment assets

Need Help With Your Mortgage Refinance?

Preparing all these documents you need for a refinance beforehand might make the process smoother. However, if you really want to have a stress-free refi, then you'll need to work with a mortgage broker.

At Ebenezer Mortgage Solutions, we'll submit your application to multiple lenders so you don't have to. This will get you access to expert-recommended refinance options that will suit your financial situation.

If you're ready to refinance your mortgage, let us know by calling (813) 284 - 4027 so we can immediately start working on it.