Today I wanted to talk a bit more in-depth about how property taxes and homeowners insurance figure into the VA loan process.
It doesn’t cost a penny to talk….so call me right now and I will answer your questions!
Today I wanted to talk about taxes and insurance and how they figure into a VA loan. I get this question from both veterans and real estate agents alike.
In most areas, real estate taxes are comprised of state, local, city, and school taxes. They are all figured in by the local appraisal district, who then sets the value of the home. Then those taxes are set based on a percentage
The monthly house payments figures into an escrow account that not only includes principal and interest, but also 1/12th of the property taxes that will be due at the end of the year as well as 1/12th of the insurance. In the state of Texas, veterans who are 100% disabled pay absolutely no property taxes whatsoever. The doesn’t happen automatically, however. They have to fill out the appropriate form and send a copy of that to the lender that is holding the loan in order to stop collection of the taxes.
Now I wanted to talk a little bit about homeowners insurance. Homeowners insurance has nothing to do with life insurance or private mortgage insurance. Homeowners insurance covers fire, liability, weather-related issues, but does not cover the home from a flood. Rising water is not covered by regular homeowner’s insurance.
Recently I’ve been asked why insurance rates are all over the board, so I did a little digging and contacted three separate insurance agents that I do business with to get an answer. The general consensus is that homeowner’s insurance is based on the size and age of the property. The older a home is, the more claims there can be on it, which will affect your rates.
Insurance rates are also affected by claim history on the home if it’s pre-owned, and the insurance claim history of the buyer themself. Insurance companies also factor in your credit score to determine rates. Generally, there are more claims on insurance policies owned by individuals with lower credit scores. Additionally, the location of the home can affect rates as well.
Something interesting to note is that insurance agents won’t insure individuals who own dogs that are pit bulls or dobermans or similar dog breeds. This is because they have seen a spike in claims related to dog bites, and don’t want to undertake that liability.
I would advise you to bundle your insurance if you can. If you combine your homeowners insurance with your car insurance, you could get up to a 20% reduction in the overall rate.
Like I always say, it doesn’t cost a penny to talk, so if you have any questions at all, give me a call. I’d be happy to help!