If you’re considering buying a home within a MUD or PID, here’s what you need to know about them.
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If you’ve been looking to buy a home in the Dallas-Fort Worth area, you’ve likely heard the terms MUD and PID a lot. They are both acronyms for organizations that raise funds to pay for utilities and infrastructure in a new community.
MUD stands for municipal utility district and is usually created by a developer. It provides water, sewage, drainage, and other utility-related services to new communities. The basic purpose of a MUD is to provide a developer an alternative way to finance the infrastructure. MUDs are likely to exist in large, master-planned communities outside city limits. As an example, a few local communities classified as MUDs are Light Farms in Celina, Artesia in Prosper, and Trinity Falls in McKinney.
PID stands for public improvement district and is created by a city or county. PIDs are used to finance the same infrastructure that MUD would finance, but they're more commonly used to fund additional items such as sidewalks, landscaping, parks, lakes, and recreation. Some examples of this kind of community include Mustang Lakes in Celina, Creeks of Legacy in Prosper, and Winn Ridge in Aubrey.
Once a PID is paid off, it’s gone forever.
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The homeowners within a MUD pay an additional annual tax. In a PID, they don’t have this annual tax, but they do have an assessment, which can be paid up front or accrued during the years a PID is active. Once it’s paid off, it’s gone forever. A MUD, on the other hand, is always going to be there and should be treated as an additional property tax.
Is it a bad idea to purchase a home within a PID or MUD or both? Yes, that’s right. There are a few neighborhoods where you can have both. My answer is that it depends.
My only recommendation is to do your due diligence ahead of time and know exactly what you will be required to pay for on a given home. Know the tax rate if you’re in a MUD, know what the PID assessment is, and the overall property taxes and fees. If you don’t want to do all this legwork, I recommend hiring a real estate agent to guide you toward the most financially sound decision.
If you have any questions for me or want to know what I can do to help you achieve your real estate goals, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.
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