Cooke County Citizens for Better & Efficient Government

VVISD Tax Impact

Home | NCTC | NCTC Alternatives | NCTC Bond Info | NCTC Analysis | NCTC Ads & Letters | NCTC Tax Impact | May 2013 Bond Election Results | VVISD Bond | VVISD Bond Questions | VVISD State Reports | VVISD Tax Elections | VVISD Bond Supporters | VVISD Complaints | VVISD Bond Ads & Letters | VVISD Tax Impact | How Can I Help

Valley View ISD is estimating a Tax Rate increase of 27.5 cents to $1.395 if the bond passes.  We wonder if they may be estimating a little low since NCTC is estimating a 5% interest rate on their bond.  Both are estimated to be 25 years.

We did some analysis on the estimated VVISD increased taxes and bond payment.
 
First we divided $275/yr, (VVISD's estimate on a $100,000 house), into 12 months and got $23/mo. (rounded)
 
Secondly we used a loan amortization spreadsheet in Excel and plugged in a typical $100,000 home purchase on a 30 year note @ 4.25% interest and assumed 20% down.  That yielded a payment of $393.55 on a principal of $80,000.
 
We then changed the interest rate to 4.75% keeping the rest the same and we got an increased payment of  $417.32, an increase of $23.77/mo. or about the impact of the tax bond based on VVISD's assumptions.
 
We then switched back to 4.25% and changed the mortgage from $80,000 to $85,000.  That changed the payment to $418.15 or an increase of $24.60, slightly more than but close to the increase in taxes estimated by NCTC.
 
This analysis shows that the tax increase effect is similar to raising your interest rate by half a percent or borrowing $5,000 more above an $80,000 loan.  Put another way, if a family could only qualify to borrow $85,000 on a $100,000 house, they could now only qualify for a loan of $80,000 because of the increased tax payment.  If the borrower can qualify for a loan of $5,000 less than they would either need to have another $5,000 in cash to make up the difference or pay $5,000 less for the house which could in effect lower the value of the house by $5,000.
 
Furthermore, on escrow payments, often when a mortgage company finds out taxes have gone up, they want you to build up a reserve to cover it in addition to paying in enough for the actual increased tax payment on a monthly basis.  As a result, a homeowner could see an escrow payment go up 115-200% of the $23 depending on the timing of their escrow account, other payments and the date the taxes are due.
 
 
 

Link to Excel spreadsheet analysis of the above

Enter content here

Enter content here

Enter content here

Enter supporting content here

Pol. Ad paid for by www.cookecitizens.org, Steve Gaylord, Treasurer