Owning a home is the ultimate American dream. Homeowners will do everything and anything to preserve that dream. Let's see how property tax loans work to fulfill that dream.
What are property tax loans?
These are loans that property tax lenders offer to property owners to cover delinquent tax payments. In return, the tax lien on the property is transferred to the lender, giving the lender a security interest in the property. Known to be quick and flexible, these tax loans are available to owners of residential, commercial and investment properties as well as raw land located in Texas. The industry is regulated by the Office of Consumer Credit Commissioner. Borrowers can better figure out how property tax loans work by studying the Property Tax Lender License Act passed by the State of Texas, the only state where property tax lending thrives.
How are property tax loans processed?
Processing of the property tax loans takes about a week. Borrowers generally fill out a loan application which allows the tax lenders to evaluate the loan. The loan approval is typically not based on the credit profile of the borrower, but rather on the type of property and the qualifications detailed below:
- Borrower qualifications – The borrower must be the titleholder of the property, have documented income, and must not be in bankruptcy. Some lending companies require a credit check.
- Property requirements – The property must be located within the State of Texas. Most lenders require a minimum property value and that the improvement is in good condition.
- Loan requirements – The loan proceeds may only be used to pay off past due property taxes. Many lenders set a minimum loan amount and a maximum loan-to-property ratio. For instance, a 20% ratio ceiling of a $100,000 house would translate to a maximum loan amount of $20,000.
What are the benefits of property tax loans?
You've seen it happen. Economic uncertainties have greatly affected people's lives. Their obligations, including preserving their homes, are often neglected until they are pushed against the wall. It's a great relief that they realize how property tax loans work to improve their lives because of the following benefits:
- Speed of processing – The average processing time is one week after completing the requirements. Processing is not as complicated as that of bank loans and it may even take a shorter time if there is an emergency. For example, if foreclosure by the assessor is imminent, the lender may expedite the loan approval.
- Peace of mind – With tax loans, homeowners don't have to worry about paying their property taxes in big lump sums as these certainly dislocate their finances. They also feel greatly relieved because they know that they can be safe from the risk of foreclosure.
- Flexibility and affordability – Because of competition, property tax loan providers have flexible terms and conditions. They offer flexible payment terms and schedules that fit borrowers' budgets. All tax loans have closing fees, but some lenders will roll the closing fees into the monthly payments, resulting in a zero out of pocket closing for the borrower.
It is important for borrowers to understand how property tax loans work and choose a property tax lender with a track record, focused only on putting the borrower's needs first. They need to look for one who will not surprise them with secret fees and charges and, most importantly, one who will work to avoid foreclosure and help them have the chance to enjoy their great American dream.