VA Loan Tax Exempt

[Anonymous]

Im getting close to closing on my new home. Im 100% disabled vet and my Oklahoma property taxes are exempt. The mortgage company still has to include the property taxes in closing, because its the way it is.. My question is, after I close and I file my property tax exemtion with the county and turn over the paperwork to the finance company showing im property tax exexmpt, do they redo my loan papers and remove the property tax charge on my bill? Or do I have to keep paying property taxes every month and file a return at the end of the year? How do i go about getting the tax portion of my mortgage payment removed after i close?

[Medic981]

That is a question I would ask the Oklahoma State Tax Commission. I am surprised that your loan originator does not know about this situation. 

[Anonymous]

Ive asked him. He kind of mumbles around and mentions the underwriter fee is $900.00 and he is trying to get my rate down and when we close we will need to see what credits are left and mentions the underwriter during closing. I think he is a really good LO. Usually when i dont understand why he does something, i research it and then it makes more sense why he did it that way so i try not to ask repetitive questions when he mumbles around. Also there's not a plethora of vets who are tax exempt, so Im not sure its something they deal with on a daily basis with VA loans. He may be trying to rat hole money to buy my rates down or something like that. I cant hardly hear so trying to understand what people are saying when they use industry specific terms makes it harder to follow whats being said and I get tired of saying hu? what?

[Anonymous]

I found this after searching for an answer for a couple of months.

Removing Property Taxes From Escrow Account

First of all, this may not always be the case. Our experience is that an application for a property tax exemption may not be approved until the qualified Veteran owns the home. Someone typically cannot apply for an exemption until they are a homeowner. Someone can’t apply for an exemption on another person’s property. Therefore, when purchasing a home, the property taxes will be charged at closing. Furthermore, if the buyer obtains a mortgage with an escrow account, the taxes will need to be included in the payment.

Once the veteran is a homeowner, the exemption application, and supporting documentation must be provided to the county and possibly local entity. If an exemption or discount is approved, give this documentation to the mortgage servicer’s escrow department. Request a review and amendment to remove or lower the property tax amount in the escrow account. Keep in mind, that this is a special request and some lenders may not consider the change until their standard annual review. Although, a Veteran should push for this immediate change.

In review, the process for removing property taxes from a mortgage payment would look like this:

• Discuss requirements and possible qualification with county up-front
• Home purchase closing takes place
• Complete exemption or discount paperwork
• If approved, contact escrow department for the mortgage servicer
• Ask for a review and amendment to your escrow account. Request removal of property tax from the payment
• Provide documentation to the escrow department

[JVille]

JesseJay is exactly right! You will need to pay into your Escrow Account for taxes UNTIL your tax exemption is approved. You can’t apply until you own the home.

[Anonymous]

I hope i am able to get the property tax removed quickly. No telling when the annual review is.

[JVille]

Get all the paperwork ready to go and submit the day after you own the house.

[VALoanMaster]

Hi JesseJay,

I work with a lot of disabled Veterans all over the country & several states like OK , TX, FL & IL have tax exemption programs for disabled Veterans depending on the percentage of disability.

The way I've been able to help Veterans with this is to have all of the paperwork for the exemption completed at closing & filed right away. This "allowed" me to not only not collect the taxes at closing but to also exclude the property taxes from the debt to income ratios.

Unfortunately what has happened in some cases (people working with other lenders) is Veterans either don't file the paperwork or they don't qualify for the exemption. What happens in these cases is the servicer gets a tax bill & because they weren't collecting taxes, you end up with an escrow deficiency. When this happens, the servicer will pay the tax bill & adjust your escrow calculations (increasing your payment) to not only pay back the tax bill they paid but to also ensure they have enough in the escrow account to pay the tax bill next year. For example.

Let's say your taxes run $3,624 per year. In order to pay that back & ensure you have $3,624 next year, your payment will go up by $604 per month! ($3,624 X 2 = $7,248 / 12 months =$604)

Most

people cannot survive a $604 increase in their mortgage payment. This is why a lot of the investors that we (lenders) sell our loans to require the escrow of taxes upfront.

When you file f

or the exemption & it get's approved, you'll send a copy it to the servicer & they will adjust your payment down.

Does that make sense?

[Anonymous]

Yes it does and I hope things go that smoothly. I hope i dont have to wait for an annual review or whatever for the servicer to remove the taxes. I was afraid that there would be some little rule where i had to refinance the loan once the property was in my name to get the taxes removed from my payments, so im glad i dont have to deal with that.. I'm getting down to that last week or two before closing and the stress factor is starting to kick in. Just waiting on the appraiser to send in his paperwork. Thanks for replying. Have you ever had anyone who had to wait for an annual review before they removed the taxes from the loan payments?

[Anonymous]

I am except for this also in Illinois. I closed on my home in May and will be responsable for paying for the taxes from May to the end of the tax year and will file for the exemption  for next years tax year. Here in Illinois, you have to own the own on Jan 1st to qualify. My lender explained it to me as they did above. They do not write it into the loan as expempt because there is no guarentee that you will actually submit the exemption paperwork.