Have you heard about reverse mortgages or perhaps you have one? Reverse mortgages let people that are at least 62 years old convert their home equity to cash. The homeowner has the option of taking out one lump sum or payments over time. Normally these reverse mortgages are not paid back by the homeowner, but they are due with interest if the homeowner dies, moves or sells the home. How can someone default on such a mortgage?
To be considered delinquent you need to be behind on your insurance and or property taxes for the home. If you fall into default, you can end up in foreclosure just as any delinquent mortgage will. Because the homeowners with reverse mortgages are normally on a fixed/limited income, there is help available if you become delinquent. The NCOA (National Council on Aging) 800-510-0301 may be able to help or find you help. Another resource is benefitscheckup.org which is a database of over 2000 government and nonprofit programs that may provide assistance.
In 2012, there were about 600,000 active reverse mortgages with 9.8% being in default, in 2011 there were only 8% in default. If you are in default on your reverse mortgage, don’t ignore it! Go out and get help before it is too late!
When buying a home you need to remember that there are costs other than the initial purchase price. There are the property taxes, utilities, home maintenance to name just a few but in recent times the utility bills are declining. The National Association of Home Builders studied home costs on different aged homes and came to the following conclusions.
“It found that homes built before 1960 have average maintenance costs of $564 a year, while a home built after 2008 averages $241. Similarly, operating costs average nearly 5 percent of the home’s value for pre-1960 structures, while they average less than 3 percent when the home was built later than 2008. The study then compared the first year after tax cost of owning a home by the year the house was built, taking into account the purchase price, mortgage payments, annual operating costs, and income tax savings. This data showed that a buyer can afford to pay 23 percent more for a new house than for one built before 1960 and still maintain the same amount of first year annual costs. While mortgage payments will be greater with the higher purchase price of a newly-built home, the lower operating costs mean the home buyer will have annual costs that are about the same as if they’d bought a lesser-priced, older home with a smaller mortgage payment and higher operating expenses.
The data all depends on where you live, how you use your own utilities, the size of the home and other factors, but it is something to consider when deciding if you should build a new home or buy an older home.
According to the Star and Tribune, there will be a property tax decrease in 2013 for about 56 of 85 Twin Cities communities. This will only be the second time they have gone down in the past 10 years. In Minneapolis the average homeowner will see about a 5.8% decrease, in St. Paul about 5.6%.
While this is great news for many homeowners, commercial property and apartment owners will be seeing an actual property tax increase.
Don’t expect this property tax decrease to continue into 2014 and beyond. The hope is that property values will be stabilizing resulting in more stable property taxes that will be mainly influenced by levies in the communities.
Click here for a chart detailing the property tax situation for some 80 Twin Cities communities.