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Property Tax Funding Blog

Anatomy of a Property Tax Loan

Posted by Matt Longhofer on Sun, Jul 22, 2012 @ 09:07 AM

A Texas property tax loan authorizes a licensed tax lender to pay the property taxes and establish a repayment agreement with the borrower.  A new lien is not created with a property tax loan; rather the existing tax lien from the tax assessor is transferred to the tax lender.  In order to complete the process, the tax lender must have a sworn authorization from the property owner granting the tax lender the right to pay the property taxes.documents in property tax loan

What Documents are in a Property Tax Loan?

We are often asked about what documents are required to complete a property tax loan.  While the approval for a property tax loan can be done the same day, to actually pay the past due property taxes we need several tax loan documents executed by the property owner.  Lenders vary somewhat in their level of documentation, but all tax lenders will at least have these 3 main components in their property tax loan.  They are:

1)      The Security Instrument – this document is normally referred to as the “Tax Lien Contract” or “Tax Lien Deed of Trust”.  This document identifies the original loan amount, the legal description of the property being used as security, the parties involved, the provisions of the agreement and requirements of the property owner, legal procedures, and the method for handling default.

2)      The Promissory Note – Simply the borrowers promise to repay.  In this document you will find the terms of a note which include the principal amount, the interest rate, the parties, the date, the terms of repayment and the maturity date.  

3)      The Sworn Document Authorizing Transfer of Tax Lien – this document authorizes the property tax lender to pay the property taxes directly to the tax assessor on behalf of the property owner.  Upon receipt of the payment and this form, the tax assessor will transfer the tax lien to the property tax lender.  

In additional to the items listed above most property tax lenders will have several supplemental documents and disclosures.  The documents normally are made of several state or federal disclosures such as a HUD1A, a Good Faith Estimate, a Truth in Lending, a Notice of Right to Cancel, and a Notice to Property Owner About Property Tax Loans, and any additional lender specific documents. 

Why Property Tax Funding?

At Property Tax Funding, we believe in over disclosure to ensure our borrowers know the exact terms and costs associated with the loan.  No one likes surprise fees or expenses, so we take extra steps to ensure there are none.  Property Tax Funding offers some of the lowest rates and fees in the industry and offers a low price guarantee.  If you’d like to learn more about property tax loans or discuss your individual tax situation, apply for a property tax loan online or contact us at 877-776-7391. 


Topics: Property Tax Loan, property tax lending

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