Missed Tax Exemptions Can Skyrocket Your Mortgage—Here’s How to Avoid It in Illinois

How Property Tax Exemptions Affect Your Mortgage

When you miss claiming key property tax exemptions in Illinois, your mortgage payment can increase unexpectedly. These overlooked exemptions often cause your lender to adjust your escrow, which in turn raises your monthly bill. At LBC Capital, we help clients understand and apply for the exemptions that keep housing costs in check and protect long-term financial health.

In Illinois, property taxes are a major component of homeownership. If you have an escrow account tied to your mortgage, missed exemptions lead directly to higher monthly payments. Lenders calculate escrow based on expected property tax bills. If exemptions go unclaimed, your property appears more valuable on paper, which triggers a larger tax assessment.

LBC Capital works with clients across Illinois to make sure this doesn’t happen. By ensuring exemptions are properly applied, we help homeowners avoid unpleasant surprises during annual escrow analyses.

Key Illinois Tax Exemptions Homeowners Often Miss

General Homestead Exemption

This exemption reduces the equalized assessed value (EAV) of your primary residence. In Cook County, it provides up to a $10,000 reduction in EAV, while other counties in Illinois offer a $6,000 reduction. The savings from this exemption directly reduce your property tax bill, and in turn, lower your monthly escrow payment. LBC Capital ensures eligible homeowners are guided through the process of applying for this exemption.

Senior Citizens Homestead Exemption

If you’re 65 or older, you qualify for this additional tax break. In Cook County, the exemption is worth up to $8,000, while in other counties it’s $5,000. When combined with the General Homestead Exemption, seniors can significantly lower their tax burden. LBC Capital helps senior clients understand and apply for this exemption before deadlines pass.

Senior Citizens Assessment Freeze

For seniors on a fixed income, the assessment freeze can be a game changer. If your household income is within the set limit (typically $65,000 or less), this exemption freezes your EAV. Even if property values rise in your area, your assessment won’t increase. That keeps your tax bill stable year after year. LBC Capital assists seniors in submitting the necessary income verification documents and renewal forms annually.

Exemptions for Persons with Disabilities

Homeowners with disabilities may qualify for a $2,000 reduction in their EAV. This exemption requires documentation, such as proof of Social Security Disability benefits or a physician’s statement. LBC Capital supports clients in assembling and submitting the appropriate paperwork, ensuring access to this critical financial relief.

Veterans with Disabilities Exemption

Disabled veterans can receive substantial property tax relief. Depending on the percentage of disability, the exemption can range from a few thousand dollars to a full exemption from property taxes. Veterans with at least 70% service-connected disability may qualify for a 100% exemption. LBC Capital is proud to assist veterans in claiming the benefits they’ve earned.

Homestead Improvement Exemption

Planning a home improvement or recovering from property damage? This exemption allows homeowners to shield up to $75,000 of increased EAV from taxation for four years following improvements. LBC Capital ensures that clients understand how to apply this exemption when investing in their homes.

The Cost of Missing an Exemption

Unclaimed exemptions don’t just mean a higher tax bill—they lead to increased mortgage payments. Since property taxes are often paid through an escrow account, lenders conduct periodic reviews. If taxes rise due to a missed exemption, your lender may adjust your monthly escrow contribution, creating a sudden spike in your mortgage bill.

Worse, if the tax increase was large and retroactive, you could also owe an escrow shortage. This requires an immediate lump-sum payment or even higher monthly bills to cover the gap. LBC Capital helps clients catch these issues early and act before the lender recalculates escrow contributions.

How to Make Sure You Don’t Miss Out

Review Your Tax Bill Annually

The second installment property tax bill typically lists the exemptions applied. Look for the Homestead, Senior, Disabled, or Veterans exemptions. If something’s missing, take action immediately. LBC Capital helps clients interpret their tax bills and spot any red flags.

Mark Your Calendar for Deadlines

Most exemption applications are due in early spring. For example, Cook County generally requires filings by March. Missing that date can cost you a full year of savings. LBC Capital tracks these deadlines and reminds clients to submit forms on time.

Prepare Your Documentation in Advance

Many exemptions require proof of eligibility, such as age, income, disability status, or veteran status. Don’t wait until the last minute. LBC Capital guides clients in gathering documents and submitting complete, error-free applications.

Use the Certificate of Error for Missed Exemptions

If you missed an exemption in a past year, you can apply for a Certificate of Error. Cook County allows corrections going back three years; other counties typically allow only one. LBC Capital helps clients file these corrections and recover tax overpayments.

Don’t Fall for Third-Party Scams

Many homeowners are approached by companies that charge to file exemptions on their behalf. But these applications are free. There is no reason to pay a third party. LBC Capital provides trusted, no-cost support with exemption filings as part of our full-service mortgage guidance.

LBC Capital Makes It Easy

You shouldn’t have to navigate Illinois property tax exemptions alone. LBC Capital brings local expertise and personal attention to every client. We walk you through eligibility, help with forms, and follow up to ensure your exemptions are applied correctly. If you qualify for a Certificate of Error, we guide you through that process too.

At LBC Capital, our goal is to keep your mortgage manageable and protect your long-term financial health. We stay ahead of deadlines, monitor changing requirements, and ensure that every dollar you’re eligible for stays in your pocket.

Act Now to Secure Your Savings

The consequences of missing property tax exemptions go beyond one tax year. They affect your monthly mortgage and your ability to budget long term. LBC Capital helps you avoid those financial pitfalls. Whether you’re buying a home, aging into new exemptions, or making improvements, we make sure you’re protected.

Let LBC Capital be your trusted partner in navigating the Illinois property tax system. We don’t let you leave money on the table—we make sure you claim it, year after year.