| 3. What is the Pre-HUD-1 report? |
| Buyers of real estate typically agree to purchase terms without knowing the total cost of what they have agreed to pay. The Pre-HUD-1 report gives a bottom line figure as of a projected closing date.
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| 4. How? |
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Projecting costs in Pennsylvania is difficult because of taxes: tax prorations, transfer taxes and, where applicable, the escrow deposit for taxes. This report crunches those numbers instantly. It also allows the user to vary the standard calculations, such as override a school districts fiscal year and prorate school taxes on a calendar year basis. Transfer taxes are accurately calculated for each municipality, but, if the user wishes, the cost allocation can be varied. The result is a buyer fully informed as to the total cost, before the sales contract is final.
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| 5. What if there is a conventional mortgage? |
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All you need to know are the basic loan terms: the amount of the loan, the interest rate, the lender's fixed fees, and whether an escrow account is required. Most of the other costs, such as survey, pest inspection, etc. are at buyer's option. The user will have to provide an estimated annual premium for hazard insurance.
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| 6. What about FHA mortgages? |
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All you need to provide is the sales price. Based on sales price and the location of the property Local-Knowledge™ will calculate the maximum FHA loan allowable. It will even give an error message if the seller assist exceeds FHA guidelines.
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| 7. What if you don't have a specific property in mind, but have a sales price and municipality in mind? |
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If the user does not provide an assessed value for a property, Local-Knowledg™ will impute an assessed value based on sales price and the Pennsylvania STEB ratio.
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| 8. What is the Pre-Settlement Report? |
| The Pre-Settlement Report calculates the county, municipal and school tax for a property. It calculates to total tax cost to a buyer/borrower involved in a purchase or refinance. Specifically, it reports the prorated tax cost to a buyer, if a sale, along with the initial escrow deposit. It also provides the name, address and phone number for each tax collector, along with the due date for each tax. |
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| 9. Why might this be useful? |
| All residential lenders want to know what the real estate taxes are, when they are due and who collects them. Lenders are also required to provide their borrowers at application a good faith estimate of closing costs. There is often a discrepancy between the costs estimated at application and the costs incurred at closing. A large cause of the discrepancy is an error in the tax pro-ration and/or escrow estimate. This report should reduce, if not eliminate the error. |
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| 10. What data is needed for the Pre-Settlement Report? |
| A user must enter a property’s county, municipality, and assessed value. |
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| 11. Where is this information available? |
Either at the website for the county or from the county assessment office. |
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12. What is the Pre Tax Appeal? |
This report compares the taxes on a property as actually assessed with projected taxes based on current market value. It computes the actual tax burden based on actual assessment and a computed tax burden based on current market value. |
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| 13. Why is this useful? |
| An owner or purchaser can quickly determine both the tax burden and the fairness of the tax burden. It also permits a comparison between municipalities of the tax burdens imposed. Finally it permits a comparison of tax burdens where only the current market value is known. |
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| 14. What data is necessary for such a report? |
| Again a county and municipality must be selected. If a comparison involving only a single property is desired, then the actual assessment and the current market value must be given. But if only the actual tax or the computed tax or a property is desired, only the assessed value or the current market value is necessary. |
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| 15. Where is this information available? |
Again the assessed value is available from the county website or the county assessment office. Current market value is the user’s opinion of what a willing and motivated buyer would pay a willing and motivated seller. |
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| TECHNICAL QUESTIONS |
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| 16. How are the actual taxes calculated? |
| Millage rate (decimal stored in database table) times assessed value (user entry) times 0.98 (discounted amount). |
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| 17. What if the millage rate is split between land and building? |
| The table has both rates and the user will be prompted to enter a separate assessed value for the land in addition to the total assessed value. The land millage is applied to the land value and the building millage to the building value. |
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| 18. What if a municipality uses an assessed value different from the county assessed value? |
| These different assessment values used by some Pennsylvania cities are multiples or factors of the county assessed value. The factors are stored in a table and used to calculate municipal taxes in those cities. |
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| 19. How is the initial escrow deposit calculated? |
| The initial escrow account calculation is done according to HUD regulations, i.e. with an aggregate adjustment. If the hazard insurance is also escrowed, the user will have to enter the amount of the premium and its next due date. |
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| 20. What if the first loan/escrow payment is the following month rather than the standard “skip a month"? |
| The user must check the box for “first payment next month” and the aggregate adjustment will be correctly calculated. |
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| 21. How are the prorated taxes calculated? |
| County and municipal taxes, along with school taxes in the cities of Pittsburgh, Philadelphia and Scranton, are prorated on a calendar year basis. All other school taxes are prorated on a fiscal year basis. |
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| 22. How are homestead exclusions handled? |
| The exclusion value is deducted from the assessed value for qualifying properties in those counties, municipalities and school districts that have adopted homestead exclusions. If the property has qualified for the exclusion, the user must check that box. |
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| 23. In the Pre Tax Appeal, how are the ‘computed’ values calculated? |
| For every property there is an actual assessed value and an actual current market value. Because every county has a mean ratio (called the common level ratio - “CLR”) of assessed value to market value, there is a ‘computed’ value for every ‘actual’ value. Thus if we know the assessed value, we can multiply it by the CLR to obtain a computed market value. Likewise if we know the current market value we can divide it by CLR to obtain the computed assessed value. Multiplying the computed assessed value by the applicable millage rates gives us the computed taxes. |
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| 24. Do you welcome feedback from users? |
| Yes. |
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