New Tax Bill Season Arrives in Chicago
and Chicago-area Collar Counties
and Chicago-area Collar Counties
Mortgage Closings for Real Estate Contracts being transacted during the month of March, will most likely occur in April ... with their first Mortgage Payments due June 1st, the same day the 1st Installment of Tax Payments are due within these counties.
How does this effect your Mortgage Closing if buying within one of these collar counties?
In the case of a Purchase closed in April: In Will County, for instance, Tax Bills (for the prior calendar year) typically come out around May 1st.
The Closing for the above-mentioned purchase will probably take place in April, before Tax Bills come out. This means the actual dollar amount of the tax bill to be made by the Seller at Closing is still unknown.
So the common practice for Closings taking place within Will County has been: Setting aside 1.5 times the previous year's tax installment amount in a T.I. (tax indemnity) Account at the participating title company.
Once the actual Tax Bill comes out, the title company pays the bill from the dollars left within that account at the time of Closing. Any excess amount remaining after the tax bill payment gets refunded to the contributing party, Buyer or Seller.
Remember: The Seller owned the property during the previous year and up to the Closing date in the new year. As a result, the Sellers leave behind a sizable Real Estate Tax Credit at Closing (15+ months for an April Closing).
In the case of a Refinance closed in April: If the first Mortgage Payment is due June 1st ... (around the time of the Tax Payment's 1st Installment due date) ... a similar T.I. (Tax Indemnity Account) is established. And a collection of 1.5 times the last known Tax Installment is held by the title company.
Once the new Tax Bill comes out, the title company pays the new 1st Installment amount and refunds any "overage" held back at Closing to the Borrower, as the Borrower has paid those tax dollars at the time of their Closing.
Ultimately, it all evens out. But if you are closing on a Mortgage during the month of April in a Chicago-area Collar County, be prepared to fund the monies required by your Lender and title company when actual Tax Bills remain unknown.
Note: Not all counties in Illinois handle this situation similarly. Procedures can vary between lenders and title companies also. Consult with your lender or attorney for confirmation regarding this topic.
For Closings and Tax Bills on properties located within Cook County: Be aware that Cook County Tax Bills are handled differently from surrounding collar counties.
The first installment of Cook County taxes are due around March 1st each year. (They are out as of this post's writing, 3/9/2015). The first installment is based on 110% of the previous year's tax bill.
This allows the various townships within Cook County to complete their assignments on each individual parcel located within their boundaries for the upcoming 2nd installment. This method has been implemented due to the size of Cook County and the vast number of tax parcels.
The 2nd installment of a Cook County tax bill is a revised bill. It's based on the Equalized Assessment and the Tax Rate levied and established for each new tax year.
August is the target date for the issuance of Cook County's 2nd installment of tax bills.
* Are you hoping to Buy, Build, or Refinance a home within Chicago/Cook County or elsewhere in the Chicagoland area? Contact Me today! I'll put my 37 years of Mortgage experience hard to work on your behalf.
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Gene Mundt, Mortgage Lender, a Lender with 37 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including: The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within
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