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Many homeowners have been taken by surprise when the
value of their home suddenly seemed to hit freefall. It
would certainly seem as though there should be one
advantage to dropping home prices; however. Many
homeowners assumed that when the value of their homes
fell, their property taxes would as well. This has not
been the case in many areas; however.
In some cases; homeowners have been shocked to discover
that not only have their property tax bills not
decreased, they have actually increased in some cases.
This has been quite a surprise for homeowners as they
struggle to understand why they are paying more in taxes
on homes that are not worth as much as they were just a
year ago.
The reason for this relates to the complex manner in
which property taxes are calculated in many areas. One
of the biggest problems, especially in Nevada, is the
fact that property tax increases were capped during the
housing boom. During this time home values skyrocketed
rapidly. Today, the values of homes in these same areas
are falling; however, the decreases have not actually
been enough to compensate for the increases of just a
few years ago. Consequently, the values of homes would
need to decrease sharply over a short period of time in
order for property tax bills to decrease. While
declining property values have certainly been a problem,
they simply have not decreased enough in many areas to
provide any relief from property tax bills.
As the rate of defaulted loans and foreclosures continue
to soar in many locations, numerous counties have
discovered that the rate of unpaid properties taxes is
also on the rise. The metro Detroit area, in particular,
is experiencing a record high rate of unpaid property
taxes. Detroit is currently considered to be one of the
worst housing markets in the United States based on the
decline of housing prices and increase of foreclosures.
The lack of jobs and weak economy in the greater Detroit
area are considered to be the primary factors
contributing to the housing crash in the area.
Even if property owners are paying their monthly
mortgage payments on time they could still be at risk
for losing their properties through foreclosure if they
fail to pay their property taxes for three years in a
row. In such situations, the county would then take
control of the home and auction it off to pay the
balance of taxes owed. Counties in the Detroit area are
currently struggling to recoup hundreds of millions of
dollars in unpaid property taxes. The issue has had
significant repercussions on counties in the greater
Detroit area.
Property owners who find they are behind on the property
taxes can take some steps to stave off foreclosure. The
first step is to begin making payments on their taxes.
Many homeowners make the mistake of thinking they are
doomed if they cannot pay off all of the taxes owed and
thus pay nothing at all. Keep in mind that making any
payment, even if you cannot pay all of the taxes, is
better than paying nothing at all. If you are not able
to pay all of the taxes; at least try to pay off your
oldest taxes first. Remember that taxes which remain
unpaid for three years consecutively places you at risk
for foreclosure. Pay off the oldest taxes first to
combat this risk.
You might also check with your county to determine
whether you may be eligible for an extension for
property taxes which are unpaid. In some situations, the
county treasurer may be able to grant you an exemption
for your taxes if you are able to demonstrate extreme
hardship. It is best to do this as early as possible;
however, as there are commonly deadlines for the
exemption applications.
In addition, check with your mortgage company or bank to
find out whether they offer any type of program or loan
that can provide you with the money needed to cover your
taxes. It is never in the best interest of the bank to
have the county take over the property, so they are
often willing to work with the homeowner to avoid having
this happen. Keep in mind; however, that when you do
this will you will be taking on an increased debt
burden.
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