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Why is lender charging non homestead taxes for primary residence?

We are in the process of buying a home for our primary residence. The house was previously a rental (current owners don't receive the homestead tax exemption). Despite the fact that we will occupy as a primary residence, lender wants to include non homestead taxes in PITI. Can we push on this? We are set to close February 10, 2015. According to Michigan law, if we file with state by May 1, 2015 we will receive homestead taxes for the entire calendar year. Advice? (FYI - my husband is a tax attorney.) by JMom258 from Grosse Pointe, Michigan. Dec 25th 2014 Reply


Thank you everyone! We will call up the attorney at the title company. Since we will be taking possession before May 1 2015 and filing the exemption prior to May 1, 2015, our taxes will be homesteaded from the date we take possession. Michigan law is quite clear on this. (Now, if we were to take possession and file after May 1, 2015, we would have to wait until the following year - 2016.) They adjust the status retroactively in this state based.

Dec 27th 2014
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,524 contributions

The lender goes by what the county has TODAY. Once you move into the home, and homestead the property, the county will change the designation to homestead and adjust the property taxes accordingly. AFTER that happens, the lender will adjust to whatever the new taxes show from the county.

Dec 28th 2014
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Ray Antonelli (Focused)
#67 ranked lender in Ohio - 52 contributions

Good Evening and Happy Holidays.I would check with a real estate attorney. There is usually one that contracts with the title co you are using. Of course if the lender picked the title co there may be some bias there. They may not wish to bite the hand that feeds them.You have enough time to change lenders if need be. If your spouse can cite Michigan law you may wish to have him copy the passages and supply the document to your loan officer who can forward it to the underwriter to get them to be reasonable. You need to get a final answer on this right away to give you enough time to find another lender. I would also mention your displeasure to the LO and let him or her know you're considering making a change if the underwriter cannot be reasonable. That may be enough to make them sit up and take notice.

Dec 25th 2014
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,225 contributions

Typically the lender will set your tax escrow based on what the closing attorney or title company tells them will be your actual taxes for the year. We have the same situation in SC and in other states. Talk to them to confirm the amount of your taxes and make sure the lender has that information. You have plenty of time to get that corrected. I handle loans in MI and would be pleased to provide an option if you are not fully committed to the other lender.

Dec 26th 2014
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

File for homestead after you are on title. Since the tax exemption will not be effective until the next tax year (2015-2016), the lender has no proof of the new tax base until the county tax bill is issued. You should see the correct impound on your 2016 escrow statement. If not, contact the lender at that time.

Dec 26th 2014
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