Reverse Mortgage Loan Blog

In the editorial of Jan. 4, the Times pointed out that fewer than 100 seniors on Cape Cod take advantage of the state’s property tax deferral program. As one who counsels seniors on ways they can stay in their homes, I can add that most seniors do not take advantage of any of the several programs designed to help them.

The seniors I talk to usually do not know what’s available, and even when they do, they are often reluctant to accept any help. And when they are willing, they can find the application process onerous.

There are three programs that should be at the top of the list for every senior who is finding it difficult to make ends meet and wants to stay in his or her home.

One is the property tax deferral program mentioned in your editorial. Under this program, which is available in all Cape towns, seniors can delay payment of their property taxes until they sell the house or die. At that time, all past property taxes, plus accrued interest, come due.

Applications for this program must be submitted every year to your town tax collector or assessor.

Before signing up for this program make sure you are comfortable with the interest rate and the fact that it accrues over time. Like a mortgage, the deferred taxes and interest become a lien on your house that is payable at sale or your death.

The second program is the “circuit breaker” tax credit. This is not a deferral program. It is a credit that can reduce your property taxes by up to $960 a year (it could be more in 2010). It never needs to be paid back. There is a list of eligibility qualifications for this program, but the main ones are income and percent of income paid in property taxes. In 2008, your total income could not be greater than $51,000 ($77,000 for a couple filing jointly). These limits may be higher for 2009.

This program applies only to that part of your property tax that exceeds 10 percent of your income, which means that if your income is, for example, $30,000, your property tax must be more than $3,000 per year. If it were, say, $3,500, you would get a $500 tax credit. Your total credit could be as much $960. To get the money, you must file a Mass. income tax return (even if you pay no state income taxes).

You should be able to get more information on either of these programs through your town’s Council on Aging (or its equivalent). If that does not work, your state representative’s office should have the information you need.

The third important program is the “Term Reverse Mortgage (TRM)” created by Homeowners Options for Mass. Elders (H.O.M.E). This is a nonprofit program available to low- and moderate-income Massachusetts seniors. It is different from the reverse mortgage you see advertised on TV in that the upfront costs are much lower and the interest rate is fixed, not variable. You can borrow no more than 62 percent of the current appraised value of your house and there is a maximum term of 15 years, after which the loan must be paid back.

This program can be used for much more than taxes. It will pay off all your current debts, can provide money for needed repairs, and give you a monthly income to make up any shortfall between your income and expenses. This program requires detailed, in-home counseling, during which you will get all of your questions answered so you can make a good decision. You can get an application by calling H.O.M.E. at 781-848-5200.

If one of these programs could be useful for you, I encourage you to get more information.

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