When you visit a mortgage broker to refinance your property, one of the documents they will ask you for is the property tax statement. The property tax amount is also important when purchasing a property because it is used to estimate your affordability. Keep in mind that this isn’t your monthly installments for paid property tax. Instead, it’s the annual amount that you owed for the most recent year.
The property tax statement is provided by the governing authority of the jurisdiction where the property is located. For most people, that will be the city they live in. However, some smaller rural areas have county- or region-level jurisdictions. The statement shows the annual levied amount for the year, and will show you the following:
· Names registered on the property
o These will be the full legal names of all owners of the property. If you moved in with a significant other, you may be considered a co-owner under common law but wouldn’t show up on the tax statement without being added to the title.
· Address of the property
o This will include more information than just your street address, such as your lot number.
· Legal description of the property
o This includes information like how large your lot is and frontage
· Roll number
o This is essentially another address, as it’s a unique numeric identifier for your property
· Education Rate
o A portion of your property tax bill goes towards funding education
· Municipal rate
o A portion of your property tax bill goes towards municipal taxes
· Customer number
o This is a unique identifier for you
· Special charges/credits
o Indicates special area charges, e.g., Central Business District Improvement Area or a Local Improvement charge.
· Past due balance
o If you missed any payments, you’ll be charged a penalty. The penalty varies in each jurisdiction
· Total amount due
o The sum of any special charges, tax adjustments, municipal/education levies, and any past-due amounts
· Installment dates
o You’re required to pay property tax in installments based on the date on your tax statement. The installment amount is roughly the total amount due divided by the number of installments
Each municipality will display the same information, but in different layouts.
You should receive a paper copy of the property tax bill every year in the mail. After all, they know your address. If you cannot find your property tax bill you can either go to the municipal office within your jurisdiction or download your statement online.
If you want to download your statements online, use the roll number and customer number provided on the statement you receive in the mail. Without the roll number and the customer number it will be difficult to download an online statement.
For both purchasing and refinancing a property, the annual property tax amount ties into your affordability. For mortgage brokers/lenders this means the Gross Debt Service (GDS). This is your total income needed to cover all of your housing costs. This includes, your Principal + Interest + Taxes + Heat. Another calculation, called Total Debt Service (TDS) which is also used to calculate your affordability uses those figures plus all your other debts. Other debt obligations means any credit cards, lines of credit, personal loans, or car loans you have.
RateShop is a preferred mortgage brokerage that will guide you through the whole process. To make, it easier, give us a call or check out our website for more information.