Every Texas property owner is feeling the burden of high property taxes. Some more than others and sometimes a property tax bill can put you over the edge of feeling financially crushed. When faced with the threat of foreclosure due to delinquent property taxes, a property tax loan may be an option to consider.
But is a property tax loan a good option and right for you?
You’re circumstances are unique. By the end of this post you’ll be able to answer the question of whether a property tax loan is a good option for you specifically.
At Simplicite, we help Texas property owners find the best solutions for their specific situations. We’ve helped guide thousands of Texas property owners with their property taxes and answered their questions about property tax loans by utilizing the following three tests:
- Alternative Options Test
- 6-Month Test
- Total Due Test
Before we jump into the three tests of whether a property tax loan is good for you, we need to make sure 2 things are true:
- You are not in property tax foreclosure. If you have received a legal notice of foreclosure proceedings, then all bets are off. Unless you have a pile of cash saved up or can get another type of loan, a property tax loan will help you save your home from foreclosure.
- The property tax loan will have NO prepayment penalties. Not all property tax loans are created equal and unfortunately some companies charge prepayment penalties. A prepayment penalty is costly. A property tax loan with no prepayment penalties could help you save your hard-earned cash.
If you are not in property tax foreclosure and you are looking at a property tax loan with no prepayment penalties then a property tax loan could be a good idea for you. But let’s make sure!
TEST #1 – Are there any alternatives to a property tax loan?
There may be some alternatives for you instead of taking a property tax loan. Here are a few examples of alternatives that people have used:
- Tax Collector Payment plan – Your tax collector could set up a payment plan. If it’s doable, great! If’s not then how do you find a solution workable for your budget?
- Borrowing money from a family member – Borrowing from family may be a possibility but can be a complicated hassle.
- Withdrawing Money from a 401(k) or IRA – If you’ve got money in a retirement plan it’s possible that you could borrow some, but be sure to pay it back quickly!
Those are just a few of the alternative options that fellow Texans have utilized in a pinch. We’ve put together a guide that shares the 9 most common ones. You can download it for free:
The Cash You Need May Be Right Under Your Nose.
Our guide highlights the most common sources that Texans go to in order to find extra cash to pay their property tax bill.
If you have a better alternative than a property tax loan, you should weigh your options and consider whether a property tax loan is a good idea for you or not. If you don’t have any alternatives, then a property tax loan could be a good option for you. Let’s apply the next test.
TEST #2 – Are you able to fully pay your property tax bill within the next 3-6 months?
- 3 Months Payoff (Excluding July 1 st ) – If you’re able to pay your property taxes in the next 3 months, then a property tax loan is unlikely to be the best option for you. HOWEVER, if July 1 st is within those three months of paying your property taxes you may be hit with significant high-cost penalties and fees by the Tax Collector. So a property tax loan could be a positive financial choice to save money in the short-term.
- 4-6 Months Payoff – If you’re able to pay your property taxes in the next 4-6 months, then a property tax loan may be likely to be a good option for you. Especially if your tax bill is over $5,000, then a property tax loan is great option especially with Simplicite’s tax savings guarantee. If your property tax bill is under $5,000 more evaluation would be needed. Click Here to talk with one of our tax experts.
- 6+ Months Payoff – If you’ve got more pressing needs than to pay your tax bill or aren’t able to gather the cash to pay it within the next 6 months a property tax loan is a good option for you. A property tax loan can save you extra cash from penalties, interest and fees from the tax collect as well as protect your home from foreclosure and offer you a monthly payment that works within your budget.
If you’re unable to pay your property taxes within 6 months and before July 1 st then you a property tax loan will most likely be a good option for you, but let’s apply 1 more test to make sure.
TEST #3 – Is your property tax bill over $3,500?
If yes, a property tax loan is definitely a good idea for you.
If no, a property tax loan may not be the best option for you. Why? A property tax loantypically costs $900 unless the lender provides a discount. If your unpaid property taxbill is less than $3,500 the penalties, interest and fees from the tax collector won’t likelyamount to $900 which means you would pay more for a loan than you would paywithout the loan. However, if your bill is less than $3,500 and you’re unable to pay thatwithin the next 12 months, than a property tax loan would be a good option to protectyour property from foreclosure.
Property tax loans are a good idea for a lot of property owners, especially for people who have:
- No other alternatives
- No ability to pay the property tax bill quickly
- Higher Balances
For some, property tax loans are a lifeline. For others, they’re a financial savings tool. They’re not a silver bullet though. They come with costs and you do eventually have to repay the loan somehow, even if it’s years into the future. In most cases, it’s advisable to explore any and all other viable options before settling on whether a property tax loan is a good idea for you or not.
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