It has been called “a bombshell,” “a perfect storm” and “a tsunami.” No matter what you call it, it’s one of the leading topics of conversation here in the Puget Sound area where AgingOptions is based. What’s causing all this conversation and consternation? In two words, “property taxes” – or, more to the point, it’s the fact that Seattle-area residents are about to face some huge increases in their 2018 tax bill from the County Assessor’s office. And from what we’re reading, neighboring counties aren’t faring any better.
One of the popular columnists in the Seattle Times, Danny Westneat, wrote this scathing piece that appeared just last weekend. The point of the column was an indictment of the state legislature for failing to find a better and less burdensome way to provide court-ordered funding for Washington State schools. Still, as we read the column, we couldn’t help but think that, for some homeowners anyway, an obvious solution to the property tax bite could be hiding in plain sight.
“Got your property tax bill yet?” Westneat writes. “Yeowza! The assessor’s office called it ‘the largest property-tax increase in King County in modern history.’ They put the word ‘modern’ in there in hopes of distinguishing it from the days when you had to pay the sheriff whatever he asked or be run out of town.” He talked about his own tax bill, just received in the mail, which is up 22 percent over 2017, adding almost $1,900 to his annual property tax total. In some rural towns in King County the tax rate is rising even higher, by as much as 31 percent.
But as we continued reading the Westneat column, it was this paragraph that grabbed our attention and got us thinking about a possible solution. “I’ve got a neighbor,” Westneat writes, “a senior on a fixed income, who is mulling taking out a second home loan just to pay his taxes. His taxes are now more than the payments on his mortgage.”
Obviously we don’t know this man’s situation, but the first thing we thought of when we read these sentences was, “This man should be talking to someone about a reverse mortgage.” As most people know, a reverse mortgage, commonly called an HECM or Home Equity Conversion Loan, is only available to qualified homeowners age 62 and older. Once frowned upon by financial advisors, these loans have in recent years (thanks in part to more robust government safeguards) become a highly recommended tool in the fiscal toolbox, especially for seniors who want to remain in their own homes as they age.
Part of the beauty of a reverse mortgage is that you’re not tying yourself to a new mortgage, which is exactly what columnist Danny Westneat’s neighbor was considering. In this article on the website MYNorthwest, Laura Kiel, co-founder of Kiel Mortgage, explains that “The FHA reverse mortgage works like any other mortgage, except there are zero monthly mortgage payments required. The payment normally paid each month on a regular mortgage is simply deferred until you no longer need the house.” Homeowners who opt for a reverse mortgage can receive their funds in a variety of ways, including regular monthly payments or a line of credit that will actually increase over time. This flexibility allows senior homeowners to design a personalized plan that will ensure they always have funds on hand to pay property taxes, keep their insurance current, and handle upkeep and maintenance.
It’s no secret (especially to readers of the AgingOptions blog) that today’s boomers haven’t saved enough for a secure retirement. However, many are sitting on (or living in) a gold mine in the form of equity. “A lot of people have a lot of equity in their home, but no way to access that equity,” said Kiel. “Reverse mortgages allow them to access equity without making a monthly mortgage payment, or even buy a new home without exhausting their cash.” Many homeowners want to keep their homes and not be forced to sell, even when the “property tax bomb” goes off in their mailbox! Our advice is that, before they opt for a more burdensome solution such as a second mortgage or home equity line of credit (both of which require regular monthly payments) these seniors and their loved ones should sit down with a trusted professional like Laura Kiel. She knows the reverse mortgage landscape and will give you honest answers to all your questions.
When it comes to all aspects of retirement planning, we at AgingOptions stand ready to assist you with a full range of strategic services designed to help you enjoy a secure and fruitful retirement. Our approach, called LifePlanning, encompasses all aspects of retirement – finances, medical care, housing options, legal protection and family communications – weaving these into a well-crafted plan that protects your assets while helping you avoid becoming a burden to those you love. To learn more about this powerful approach to planning for your future, we invite you to join Rajiv Nagaich – without obligation or cost – at a future LifePlanning Seminar. You’ll find all current dates, times and seminar locations on the Upcoming Events tab by simply clicking on this link. You can register online, or contact us during the week, and we’ll gladly assist you.
It will be our pleasure to help guide you into the retirement you’ve always hoped for! We’ll look forward to meeting you soon.
(originally reported at www.seattletimes.com)
Image credit: www.aag.com
