Misconceptions of First Time Home Buying & First Time Mortgages

February 4, 2010 by  
Filed under Mortgage Updates

Buying your first home can be an exhilarating experience, but it can also be extremely stressful, especially if your mortgage company fails to keep you informed or help you through the buying process. Although the current housing market in Baltimore provides great opportunities for first-time home buyers–with FHA loans, tax credits, assistance for down payments and closing costs, and low interest rates–the numerous options associated with these opportunities can make first-time mortgages a confusing subject. Even as you take the first step of simply considering to purchase a home, we want to keep you informed, insuring that the mortgage process runs smoothly from start to finish. Some of the most important things to know up-front are the common misconceptions of first-time home buying.

Misconception #1: I can’t afford a home.

Income is certainly one of the factors that determines loan approval; however, that factor is primarily examined to determine that the first-time home owner will be able to make payments on the loan each month. In other words, Maryland mortgage companies are not concerned about whether a borrower is in the highest income bracket, but whether that borrower is seeking to live within his or her means. If you are “house hunting,” for example, searching for homes within a realistic budget should increase your chances of being approved for a loan. Keep in mind that you can usually deduct the interest and property taxes you pay on your home from your income taxes . In fact, the amount saved in taxes from owning a home often makes up some, if not all, of the difference in the cost of buying over renting. Buying beats renting in terms of establishing equity, as well: when you become a home owner, you typically build equity, meaning that the value of your home increases over time. Renting, on the other hand, only benefits the landlord.

In light of the recent extension of the first-time home buyer credit, there is even more incentive to purchase a home. Under the law, “an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010″ (according to the IRS website). Those who are eligible for the credit and purchase homes in 2010 can choose to claim the credit on their 2009 or 2010 tax return. For more information on the tax credit of up to $8,000 or ten percent of the purchase price, feel free to contact us. 

Misconception #2: I can’t buy a home because I don’t have a large down payment:

Perhaps because large down payments were required for loan approvals in the past, this misconception is often the most common. If you are considering a first home mortgage, you may be eligible to receive an FHA (Federal Housing Administration) loan, the choice of many first-time home buyers because it typically only requires a minimum down payment of 3.5%. Under the recently announced FHA policy changes, FHA loan applicants must have a minimum FICO score (a specific type of credit score) of 580 to qualify for the 3.5% down payment. However, there are many loan options for first mortgages, and we will be glad to walk you through those options if you would like more information.

Misconception #3: My credit isn’t good enough to pursue a first home mortgage.

Even potential buyers with the worst credit situations have to start somewhere, though first-time buyers with better credit scores will typically be presented with more options, lower interest rates and lower down payments. If you are considering applying for a loan and are concerned about your credit score, feel free to contact us with questions regarding your unique situation. We will gladly help you find the best  loan option for you.

Will Obama’s $33 Billion Tax Credit Help Stall The Foreclosure Problem

February 3, 2010 by  
Filed under Real Estate Politics & Regulations

It is no secret that a large part of the current wave of foreclosures is due to the high unemployment rates ravaging the country; home owners without jobs have difficulty making mortgage payments and many of them have ended up with homes teetering on the brink of foreclosure.

To help alleviate the problem, the President has announced a proposal of 33 billion dollars in tax credits to hopefully support the hiring of workers by small businesses across the nation to prop up struggling employment rates. As the political scapegoat for the struggling economy, President Obama is working to reverse some of the economic trends that we have been seeing progress for the past few years.

The new proposal for the 33 billion dollar tax credit is aimed at helping small businesses hire new staff by providing them with a $5,000 tax credit for each employee hired up to a maximum of one hundred new employees. Estimates suggest that up to a million small businesses could be assisted by this initiative. An increase in jobs would support the recovering economy by putting more money in the hands of consumers which would, in turn, help create more jobs and support the economic recovery.

The proposed tax credit program will hopefully begin to take shape very soon; there are a great number of homes with delinquent loans on the verge of foreclosure filings all across the country which belong to home owners who are un- or under-employed at present. While it is likely that this new proposed tax credit is not going to single-handedly turn the tide on the current wave of foreclosures that are poised to start happening in the first quarter of the year, it is hoped that it can—in combination with other programs—help to put more people in jobs that will help put money in their pockets to spend.

With the changes that the government has made to the mortgage modification program recently to help home owners who are delinquent on their loan payments, it is possible that these new initiatives to get more people working can make some headway into changing the trends that we have seen in the housing market over the last year. Hopefully the government will continue to work on supporting the recovery of the economy until we are out of the recession.

How Mortgage Rates Are Determined

February 3, 2010 by  
Filed under Mortgage Updates

You are ready to buy a home and now are looking at obtaining a mortgage. As you begin your research you are most likely educating yourself on how mortgage rates are set and what causes them to change.

There are a number of reasons mortgage rates go up and down. The first is Bond Prices. Mortgage rates are backed by mortgage securities, which are also bonds. Mortgage rates will decrease if the price of a bond increases, enabling the banks to sell them at a high price. When bond rates sell at a lower price, mortgage rates will, in turn, increase. Whether a bond’s value is high or low can depend on many things. One influence can be the cost of stocks. Stocks and bonds compete for the same investment dollar on a daily basis and because there is only so much money people will invest, people with either choose the stock or the bond.

Another influence can be the Federal Reserve. When the Federal Reserve feels that interest rates need to be decreased in an effort to stimulate the economy, this reduction in rates can often cause a stock market rally. When the market becomes bullish, the money to invest in stocks comes from the selling of mortgage-backed securities. This isn’t to say The Federal Reserve is a primary indicator of mortgage rates. The Federal Reserve typically affects short-term interest rate maturities, the Fed Funds rate, and the Overnight Lending rate. These factors have a direct impact on the Prime rate. If you took only this into consideration, you may mistakenly conclude that changes made by the Feds will cause a similar movement in mortgage interest rates. However, mortgage interest rates are dictated by the trading of bonds or mortgage-backed securities, which trade on a daily basis.

Supply and Demand is another large factor in not only the cost of a home but also in the value of a mortgage. The price of almost everything is often determined by supply and demand. If there is a high demand for homes typically interest rates will increase based on the demand for credit. If there is a low demand for credit then interest rates will decrease. Supply and demand is often affected by national financial trends.

Banking Costs also affect mortgage rates. COFI or Cost Of Funds Index determines how much interest banks have to pay on sources of money such as savings accounts or CDs. If bank rates increase or the cost at which they can loan money, so do mortgage rates. If it is lowered, banks can pass on this discount. COFI is often determined by national and international economic conditions.

The ways people keep their money in banks can also be behind COFI interest rate changes as well; if fewer people put their money in savings accounts, which generally pay little interest, and place more money in higher-paying Certificates of Deposit, mortgage rates may increase because of the higher interest cost being paid to account holders.

There are many reasons mortgage rates can drop, all stemming from a few core influences. Typically it is not just one more two events but a number of factors that come in combinations of many direct and indirect economic factors and indexes which they influence.

What Your Remodeling Contract Should Say

February 1, 2010 by  
Filed under Home Remodeling

Review your remodeling contract carefully and make sure it protects you in terms of payments, work schedules and project  specifications.

Even if you never intend to pick up a hammer for your remodeling project, there’s one tool that’s absolutely essential—a solid contract. But just having one often isn’t enough. That’s because the document a contractor gives you is designed to protect him. It’s up to you to add in some basic protections for yourself. Here’s what you need to know to make sure the remodeling contract you sign includes solid legal protection for you and your home.

Hiring a lawyer to review and make changes to a contract is a safe bet, especially since each state has its own construction-contract statutes. But not many homeowners are willing to shell out $500 for an attorney review, plus $1,000 to $1,500 additional fees to make wholesale revisions to a flawed contract. However, you can hand-write changes and additions in plain English and make sure both you and the contractor initial each change to the document. Here’s what you want to add (and subtract).

Project specs

Start by reviewing your contract, a process that should take several hours. The most important element of a contract is a thorough and complete description of the project, and the materials and the products that will be used. “It should say that the contractor will secure all necessary permits and approvals as well as what walls are being moved where, what type of countertops are going in, what type of sink, what type of faucet, and so forth. “You can’t rely on everyone’s memory because if there’s a problem later, people may remember different things.” The contract needn’t contain these specs on its pages, it can simply refer to the contractor’s attached itemized bid. Avoid allowances, which are pools of money set aside for work to be determined later, and which often lead to cost overruns

Payment schedule

The contract should also state the total price for the job, and that it’s a fixed price—not an estimate. It should provide a schedule of how the payments will be made by linking them to milestones in the work—such as when the foundation, rough plumbing, and electricity will be completed—so you’re paying for work only after it’s done. “You should always have enough money left to hire someone else to finish the work if need be. In general, the first payment should be no more than 10% of the total job and the final payment should be at least a few thousand dollars to ensure that it’s a big enough incentive to get the contractor back for the final niggling details. If you’re unsure whether the payment schedule is proportional to the milestones your contractor suggests, ask a friend who’s familiar with construction process or consult a construction attorney.

Start and end dates

A contractor’s boilerplate contract rarely includes dates for when he will begin work and when he will complete the job, so make sure those details are included. It’s not that he’ll be penalized if it runs late, only that if you ever have a major problem and need to sue him—or defend yourself from a suit he brings—showing that the contractor is, say, two months behind schedule will help you make your case. The dates needn’t be too exacting. If he says it’s a six to eight week job, eight or even nine weeks is fine for the contract.

Statement about change orders

Make sure the contract contains a line stating that any changes that will affect the cost of the job must be priced in writing and countersigned by both the contractor and homeowner before that work commences. That ensures that an offhand discussion about a possible change to the project won’t result in a huge unforeseen additional cost. It also helps you, as the homeowner, keep track of exactly how much you’ve added to the bottom line, so you can avoid the very common urge to keep expanding the job.

Binding arbitration

Many contractors include a line that says that rather than going through the courts, disputes will be resolved by an arbitrator. Some legal experts feel that this is a quicker and lower-cost solution to problems, so a binding arbitration clause isn’t necessarily a problem. What can be trouble is if the contract requires a specific arbitrator. “There are some big, national, well-respected arbitrators, like the American Arbitration Association. And there are other questionable arbitrators that always side with the contractor. If a particular arbitrator is specified, I’d do some internet research about the agency to make sure it’s legit.”

Warranty

Having the contractor’s warranty in the contract seems like a good thing, right? Well including it is often actually a technique for limiting how much liability the contractor has. “It’s usually loaded up with exclusions and time limits,  you’re actually better off with no mention of warranty at all because then the only limits on his warranty are what’s in the state statutes.” In other words, keeping the contractor’s warranty language in the contract will likely mean you’re agreeing to less than what state law provides. For example, state law may specify a longer warranty term than what the contractor’s warranty offers. So, unless you’re having a lawyer review the contract, strike the warranty clause.

Technicalities

There are numerous state-by-state requirements for construction contracts. He may have to include his contractor’s license number, for example, and he may have to include a clause saying you have the right to rescind the contract within a certain time period after signing. And unless you and the contractor sign the document, it doesn’t matter what it says—it’s not a valid contract.

7 Ways To Save On Lighting Cost

February 1, 2010 by  
Filed under Home Remodeling

Lighting is one of the biggest energy gobblers in your house, eating up between 10% and 20% of your total electric bill. But it’s also one area of the home where a minimal effort can yield major returns. Simply replacing standard incandescent light bulbs with compact fluorescents can lower operating costs by as much as 75% per bulb. And in places where you can’t—or don’t want to—switch to CFLs, you can use higher-efficiency incandescents and even make your existing conventional lighting cheaper to operate. When new federal legislation takes effect in 2012, all light bulbs will have to meet tougher energy-efficiency standards. But with a few small changes, you can start saving money right now

For the greatest savings, switch to compact fluorescents

CFLs remain the go-to choice for energy efficiency. They last longer and consume less electricity than a standard incandescent. A 13-watt CFL, for example, gives off the same amount of light as a 60-watt incandescent and burns for 10,000 hours, compared with 1,000 hours for the conventional bulb. A typical CFL saves about $30 in operating costs over its lifetime.

Early CFLs didn’t always deliver on light quality or convenience, but aesthetic performance has improved vastly in recent years. They now come in warm, neutral, and cool “colors,” and major manufacturers like GE have started enclosing the telltale spiral in a conventional bulb shape so it’s less obtrusive.

You get the biggest bang for your buck with CFLs in places where you would otherwise use incandescent bulbs: floor and table lamps and standard overhead fixtures. They last longer when they’re not flipped on and off constantly, so they’re especially good in rooms that see a lot of activity throughout the day, such as a kitchen or a playroom. A couple of caveats: CFLs can be glary, so they’re not the best choice in downward-pointing fixtures like chandeliers, and most don’t work with dimmers or timers. Because the bulbs contain mercury, they can’t be thrown out in the regular trash. If you bought them at a home center, you should be able to return them there for recycling, or log on to recycleabulb.com to find a disposal center near you

Cost and savings: Expect to pay $2 to $15 for a CFL, versus 50 cents to $1 for a comparable incandescent, but the CFL will last at least 10 times longer and cost up to 75% less to operate.

Make your existing incandescents less expensive to run

By simply lowering the wattage of an incandescent bulb by 15 watts—from 75 to 60, for example—you can knock 15% off the operating cost. And you may not even notice the difference in brightness. “A small reduction in wattage isn’t discernible to the eye,” says Brett Sawyer, a consultant who blogs about sustainable home design. If the light is on a dimmer, for every 10% you lower the brightness, you’ll double the bulb’s life. Try this next weekend, Sawyer says: Replace your most-used bulbs with ones at least 10 watts lower. If you don’t notice the difference, then replace all the incandescents you can with lower-wattage bulbs. Combine that with CFLs in selected fixtures, and you’ll achieve a “light layering” effect that saves money without compromising light quality, and without a hefty upfront investment.

Cost and savings: For every 15-watt reduction, you reduce energy use by 15%. And a $10 dimmer, once installed, costs nothing to use

Keep an eye on new bulb technologies

Spurred on by new energy requirements set to go into effect in 2012, bulb manufacturers are working feverishly to come up with more efficient versions of the standard incandescent. Presently, companies including GE, Sylvania, and Philips offer high-efficiency incandescent and halogen bulbs that use less energy than standard incandescents while delivering the same light quality. And research is proceeding apace on how to bring the dramatic energy efficiency of LED technology to residential products. These lights, which require very little current and last even longer than CFLs, are prohibitively expensive for home use (except in certain applications like under-cabinet strip lighting), but that’s likely to change in the coming years.  

Think beyond the bulb to save on lighting costs

Changing bulbs is one way to reduce your lighting bill, but it’s not the only way.

Motion sensors: Great in rooms where the occupants can’t be counted on to turn off the light, such as a kids’ playroom. Devices cost $15 to $50 and take about an hour to install.

Door-jamb switches: Best in a pantry or closet; opening the door activates the light. As much a convenience as it is an energy saver—as long as you remember to close the door. Devices starts at about $15.

Windows: You’d be surprised at how  much a simple window cleaning can instantly improve natural light.

Energy Star fixtures: Designed for CFL and LED lights, these can save up to $70 a year in energy costs. Go to energystar.gov to find links to manufacturers

Homeowners Insurance

February 1, 2010 by  
Filed under Consumers Tip of the Week

You should complete an annual Homeowners Insurance Policy Checkup once a year particularly around the time for renewal.This will ensure  your policy still provides the right level of coverage for your family  and your premium isn’t costing you more than it should.

Remember, homeowners insurance is essential. The coverage is designed to protect your home and its contents, as well as shield you from liability for accidents and such on your property. Block out an hour of your time, call an insurance agent, and get answers to these three important questions.

 

What type of coverage do I have?

The most effective type of coverage is known as “replacement cost,” which covers, up to your policy limits, what it would take today to rebuild your house and restore your belongings.

“Extended” replacement cost coverage provides protection to your policy limit, say $500,000, and then perhaps another 20% of the cost after that. Percentages vary, but in this example you could recoup up to $600,000 on a $500,000 policy, assuming your losses reach that high. Extended coverage can compensate for any unanticipated expenses like spikes in construction costs between policy renewals. Now harder to find due to the industry shift toward extended replacement coverage, “full” or “guaranteed” replacement coverage covers an entire claim regardless of policy limits.

A less attractive alternative is “actual cash value” coverage that usually takes into account depreciation, the decrease in value due to age and wear. With this type of policy, the $2,000 flat-screen TV you bought two years ago will be worth hundreds of dollars less today in the eyes of your claims adjuster. 

Even if you have replacement cost protection for your dwelling and personal property, don’t assume everything is covered. Structures other than your home on your property—such as a detached garage or swimming pool—require separate coverage. So too do luxury items like jewelry, watches, and furs if you want full replacement cost because reimbursement for those items is typically capped.

How much coverage do I really need?

OK, now that you’re clear on what type of policy you have, you need to figure out how much policy you truly require in dollar terms. Let’s say you purchased your home five years ago and insured it for $200,000. Today, it’s worth $225,000. Simply increasing your coverage to $225,000 may nonetheless leave you underinsured. Here’s why

The key to determining how much dwelling coverage you need isn’t the value of your home but the money you’d have to pay to rebuild it from scratch.Call your local contractors’ or homebuilders’ association and inquire about the average per-square-foot construction cost in your area. If it’s $150 and your home is 2,000 square feet, then you should be insured for $300,000.

There’s no rule of thumb for how much your homeowners insurance should cost. Insurers use numerous factors—age, education level, creditworthiness—to determine pricing, so the same policy could run you more than your neighbor. In recent years the average annual premium was $804. Oshinsky advises against scrimping on insurance because big increases in coverage probably cost less than you’d think. He recently purchased a liability policy that cost $250 for the first $1 million in coverage. Adding another $1 million increased his premiums only $12.50 more.

How can I lower my premiums?

The higher your deductible, the amount you pay out of pocket before coverage kicks in, the lower your premium. Landing on the appropriate deductible level requires remembering that insurance should cover major calamities, not minor incidents. Most homeowners should be able to absorb modest losses like a broken window pane or a hole in the drywall without filing claims. If you can, then you’re wasting  money wit a $250 deductible.

Every major insurer offers discounts to various groups, such as university employees or firefighters. Figure about 5%. Ask which affiliations would entitle you to a discount and how much. If an AARP membership would result in a $50 savings, pay the $16 dues and pocket the $36 difference. Many insurers also offer discounts ranging from 1% to 10% or more for installing protective devices like alarms and deadbolt locks, for going claim-free for an extended period, or for insuring both your car and your home with the same carrier

HUD Toughens FHA Program

January 20, 2010 by  
Filed under Mortgage Updates

HUD Toughens FHA Program
The FHA announced changes to its mortgage insurance program today intended to shore up its capital reserves and increase lender enforcement. FHA Commissioner Dave Stevens said the upfront fee on FHA loans will increase 50 basis points from 1.75 percent to 2.25 percent sometime in the spring, and HUD will ask Congress for the authority to increase the annual fee past its statutory cap of 0.55 percent. FHA borrowers with credit scores less than 580 will be required to make a 10 percent down payment instead of the traditional FHA minimum of 3.5 percent. Some industry observers noted that most lenders aren’t doing business with credit scores less than 620. In addition, HUD will reduce allowable seller concessions from 6 percent to 3 percent and pursue legislative authority to require that FHA lenders indemnify the agency for loans they originate or underwrite.

Mortgage Forecast for 2010

January 11, 2010 by  
Filed under Mortgage Updates

The first full week of the new year wasn’t one of the more encouraging weeks. It began with a dour report on pending home sales, which tumbled 16% in November, raising concerns among many economists that the housing recovery could be poised for a relapse.

The most repeated explanation for the drop in pending sales was that October’s numbers were buoyed as buyers rushed in to take advantage of the federal tax credit before its initial expiration on November 30. Of course, we now know that the credit has been extended through April and expanded to include a $6,500 incentive for some buyers who already own a home.

The good news is the November report did not account for the new-and-improved federal tax credit. So after we work through November’s bout of housing dyspepsia, we will likely see sales rates gradually pick up and home inventories gradually decline.

That is, if employment – the most important variable in any recovery – improves. The news is not as encouraging as we would have liked. Friday’s employment report showed the official unemployment rate held steady at 10% for December, though employers shed an unexpectedly high 85,000 jobs.

The first question that pops to mind is, “How can the unemployment rate hold steady if job losses increased?” Once people stop looking for jobs, they are no longer counted among the unemployed, which is why there is a supplemental employment report. When discouraged workers and part-time workers who would prefer full-time jobs are included, the “underemployment” rate in December rose to 17.3% from November’s 17.2%.

December’s employment numbers have led a few pundits to believe the job situation will not improve much in 2010. We think it is too soon to consider throwing in the towel. It’s worth noting that the Federal Reserve still thinks the economy is improving, saying in the minutes of its last meeting of the Fed governors that “ economic growth was strengthening in the fourth quarter, that firms were reducing payrolls at a less rapid pace, and that downside risks to the outlook for economic growth had diminished a bit further.”

It is not a ringing endorsement of the economy, to be sure, but it is an endorsement.

 

 

The Big Overhang

The Federal Reserve is on lenders’ minds these days, and for good reason: They are concerned how the Fed’s plan to wind down purchases of mortgage-backed securities will influence the lending market.

Over the past year, the Fed has bought $1.25 trillion of mortgage-backed securities to ease lending markets and keep longer-term rates low. The program has succeeded on that front by pushing mortgage rates below 5% to levels unseen since the early 1950s. The big fear now is that when the Fed stops purchasing these mortgage-backed securities (and that is the plan for late March) mortgage rates will start rising and the housing market will start back peddling.

We think the fears over a rate-induced reversal are overdone. Lower rates have done their job, but they have done about all they can do. We’ve argued in past editions that a rising interest-rate environment wouldn’t be the worst thing to happen, because it would motivate people to act, particularly if rising rates are accompanied with rising economic activity and rising employment levels – both of which we still see as likely for 2010.

When the economy does officially improve, all the goodies we have become accustomed to will go away as well. However, that is not bad either. Sound markets are reflective of their ability to stand on their own two feet. At this point, just about everybody would like to see the mortgage and housing markets do just that.

In the meantime, mortgages rates and home prices remain very attractive. We just cannot say for how long. With the proposed changes in FHA lending standards, likely additional mortgage-market oversight, April’s impending expiration of the federal home buyer’s tax credit, and the Fed backing out of the mortgage securities market, the deals we see today might not be so attractive a few months down the road.

Treasury Department Streamlines Short Sale

January 6, 2010 by  
Filed under Real Estate Politics & Regulations

 

 

 

Treasury Department Announces Program to Streamline Short Sales

On November 30, 2009, the Treasury Department released guidelines and forms for its new Home Affordable Foreclosure Alternatives Program (HAFA). HAFA is component of the Home Affordable Modification Program (HAMP). NAR has been urging the Obama Administration for months to take action to address the many problems with short sales.

HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure of a loan eligible for modification under the HAMP program. HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac, which will issue their own versions in the coming weeks. Program features include: pre-approving sales terms before listing the property, prohibiting servicers from requiring reductions in real estate commissions that do not exceed 6 percent, paying incentives, releasing borrowers from future liability for the unpaid portion of the first mortgage debt, and imposing deadlines at each stage.

The program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements. The program sunsets on December 31, 2012.

My Property Taxes Are Too High What Do I do?

January 6, 2010 by  
Filed under Real Estate Politics & Regulations

THE ASSESSMENT APPEAL PROCESS

Property owners sometimes feel that the department’s estimate of their property value is wrong. The assessment appeal process is available to allow property owners the opportunity to dispute the value determined by the department. Property values rise and fall to reflect the market. A property owner should file an appeal when they believe that their property is not valued at its current market value.

Appeals may be filed on three occasions:

  1. upon receipt of an assessment notice;
  2. by a petition for review; and
  3. upon purchase of property between January 1 and June 30.

APPEAL ON REASSESSMENT

Property owners will normally receive a Notice of Assessment every three years that shows the old market value as well as the new market value. The new value reflects the market influence and other conditions affecting the property from the time of the last assessment.

If you decide to appeal, the first step is to reply to the Notice of Assessment by signing and returning the appeal form within 45 days of the date of the notice. Following this, a personal or telephone hearing will be scheduled. Appeals can also be made in writing, eliminating the need for a hearing.

PETITION FOR REVIEW

If events have occurred since your last regular assessment that you believe have caused your property value to decline or if you failed to respond to the Notice of Assessment within the required time frame, you may file for a petition for review by January 1 of any year. Click here to obtain a Petition form. The completed form should be mailed to your local assessment office. After filing the petition, you will be scheduled for a hearing; or, if you prefer, your written submission can be reviewed eliminating the need for a hearing.

APPEAL UPON PURCHASE

If you purchase a property and the property is transferred after January 1 but before July 1, you may file an appeal within 60 days of the transfer. After filing a written appeal, you will be scheduled for a hearing; or, if you prefer, your written appeal can be reviewed instead of having a hearing.

FIRST STEP – SUPERVISOR’S LEVEL

The first level of the appeal process, known as the Supervisor’s level, is informal. You will present your case to an assessor designated by the Supervisor of Assessments. Typically, hearings at this level take approximately 15 minutes.

You can obtain a copy of the worksheet for the property free of charge from your local assessment office. The information on the worksheet will be reviewed at the time of the hearing to assure its accuracy.

For assistance in estimating the value of your property, you can obtain sales data from various sources, including: sales listings located in the local assessment office; commercially available sales reports and other information available at local libraries; local Real Estate offices; personal surveys of recently sold comparable properties in the area; and local listings of sales transactions in the newspaper. For a nominal fee, worksheets of comparable properties may be obtained from the assessment office.

To be most effective, you should:

  • Focus on those points that affect the value of your property.
  • Indicate why the Total New Market Value does not reflect the market value of the property.
  • Identify any mathematical errors on the worksheet or inaccurate information describing the characteristics of the property (such as the number of bathrooms, fireplaces, etc.).
  • Provide examples of sales of comparable properties which support your findings as to the value of the property.
  • Avoid the following issues since they are not relevant to the value under appeal: comparison to past values, percent of increase, additional metropolitan costs, the amount of the tax bill, properties in other taxing jurisdictions, and services rendered or not rendered.

Your first level hearing should be viewed as an opportunity to present evidence which would indicate that the department’s value of the property is inaccurate.

SECOND STEP – PROPERTY TAX ASSESSMENT APPEAL BOARD

Following the hearing, you will receive a final notice. If you disagree with the decision, you can appeal to the next step which is to the Property Tax Assessment Appeal Board. The second step appeal must be filed within 30 days from the date of the final notice from the Supervisor of Assessments.

There is an independent appeal board comprised of 3 local residents in each of the counties and Baltimore City. Property owners generally need no assistance at this step, no fees are required, and they are free to present any supporting evidence. You can obtain a list of the comparable properties that will be used by the assessment office before the Board if you file a written request to the assessment office at least 15 days before the scheduled date of the hearing.

THIRD STEP – MARYLAND TAX COURT

If you are dissatisfied with the decision made by the Appeal Board, you can file an appeal within 30 days of the date of the board’s decision to the Maryland Tax Court. The Maryland Tax Court is an independent body appointed by the Governor. Although the proceedings are more formal than the first 2 levels, it is still considered to be an informal, administrative hearing. Property owners who are in disagreement with the Tax Court’s decision can appeal further through the regular judiciary system. Here you will probably need legal counsel.

RECAP

The assessment appeal process is a mechanism intended to assure an accurate property valuation. If you believe that the value placed upon your property is higher than it should be and if you can provide supporting evidence (such as sales information for properties comparable to your own), then it is in your best interest to appeal.

 

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