If a senior has run into trouble paying his or her property taxes on a fixed income, a reverse mortgage could present a possible option. However, seniors should be aware of issues that may arise with such products, and should consult a housing counselor before making a final decision.
This is according to a new column published at the retirement lifestyle website NextAvenue.
While higher home price appreciation (HPA) is generally a welcome occurrence for seniors who have invested in their homes, they could come with higher property taxes that could be troublesome for a population largely living off of a fixed income.
“Nationwide, the property tax bill for a single-family home rose 4.4% in 2020, according to ATTOM Data Solutions,” the column reads. “And realAppeal, which helps people appeal property tax bills, forecasts property taxes will increase about 6.5%, on average, in 2021. “These tax hikes hit financially vulnerable homeowners the hardest, including older Americans living on fixed incomes, according to Michael Billnitzer, executive director of the Cleveland-based Benjamin Rose Institute on Aging’s ESOP subsidiary.”
ESOP (Empowering and Strengthening Ohio’s People) is an organization specifically catered to the financial needs of older Americans, and the unique realities that come with such a status. While social security benefits are set to increase to record levels this year, even those increases will not be enough in the face of the potential property tax increases.
“Here in Cuyahoga County, property taxes have gone up, on average, 16%,” Billnitzer told NextAvenue. “Older adults, many already struggling to make ends meet as it was, are now facing these kinds of steep tax increases and finding it much harder to afford aging in their home.”
That reality could eventually push older Americans into desperation, which could lead them willingly into the influence of bad actors like scammers, he said.
In terms of what can be done, getting the “right” kind of help (such as a housing counselor approved by the U.S. Department of Housing and Urban Development [HUD]) and making sure the property tax bill is not being ignored are key, according to Antoinette Smith, ESOP’s counseling director.
While a reverse mortgage has the potential to be beneficial for seniors in such situations, proper vetting and diligence by a prospective borrower is key to exploring this as an option, Smith told the outlet.
“[Reverse mortgages] are among the costliest mortgage loan products and because interest is added to the loan each month — and homeowners are not making payments — the balance on reverse mortgages grows over time,” the column reads. “If a borrower dies, sells their home or moves out, the loan immediately becomes due. Smith recommends talking to a housing counselor before taking out a reverse mortgage and avoiding payday loans altogether.”
Read the column at NextAvenue.