Reverse mortgage products allow senior borrowers the ability to eliminate their monthly forward mortgage payment, while also allowing access to a home equity line of credit. One of the key borrower requirements, however, is their ability to pay mortgage insurance premiums, costs associated with their home’s upkeep and the payment of associated property taxes.
However, some states have programs that allow seniors to defer their property tax payments in order to allow more financial flexibility for Americans on a fixed income, which can also include veterans, the disabled and those who have lost a spouse.
According to data from MoneyTalksNews, the 12 states with property tax deferral programs are:
- California
- Colorado
- Idaho
- Illinois
- Massachusetts
- Michigan
- Minnesota
- Oregon
- Tennessee
- Utah
- Washington
- Wyoming
In order for seniors to qualify, there’s an age minimum that varies between 61 and 65 based on the state, but the majority of the states feature an age minimum of 65. There may also be other eligibility requirements based on income depending on where you are seeking to obtain a property tax deferral.
Historically, there have been some issues around tax deferral programs in some states such as Oregon and Illinois. In Oregon, a 2011 stipulation was enacted that caused seniors with reverse mortgages not to qualify, which affected 24 percent of the program’s applicants. In April of 2013, the state legislature acted to reinstate 1,500 of those applicants, before they were made eligible to reapply for admission again in 2014. However, under the provisions, new reverse mortgage borrowers were still shut out from participating.
In Illinois, former Governor Bruce Rauner signed the “Reverse Mortgage Act” into law in 2015, which includes provisions that require lenders and the state’s Attorney General’s office to provide certain reverse mortgage disclosures to prospective borrowers. Under this law, the terms of a reverse mortgage could adversely affect the loan applicant’s eligibility to obtain a tax deferral under the state’s Senior Citizen Real Estate Tax Deferral Program.
It’s also worth remembering that the states listed feature property tax deferral options, which is not a waiver of the taxes. A person who takes advantage of these programs will still owe the taxes. “In fact, it’s not unlike taking out a loan in that it effectively postpones your financial obligation to a later date, rather than waiving it,” Money Talks writes.
Users of the program will also likely accrue interest, with the rate in California under their deferral program standing at 7 percent.
Potential applicants to these programs are encouraged to contact their loan originators and/or tax professionals to learn all of the details concerning their potential eligibility.
Find the full article at Money Talks News.
