What Property Taxes Mean for Your Parent’s Reverse Mortgage

A reverse mortgage eliminates your parent’s monthly mortgage payment — but it doesn’t eliminate property taxes. This is the single most important compliance obligation, and it’s the number one reason reverse mortgages run into trouble. Here’s what every family needs to know.

Why Property Taxes Still Matter

When your parent has a reverse mortgage, they’re still responsible for paying property taxes, homeowner’s insurance, and maintaining the home. These aren’t optional — they’re loan obligations. If property taxes aren’t paid, the loan can go into default, which could eventually lead to foreclosure.

According to the National Reverse Mortgage Lenders Association (NRMLA), property tax delinquency is the leading cause of reverse mortgage defaults. It’s not that seniors can’t afford the taxes — it’s that without a monthly mortgage payment reminding them, the obligation can slip through the cracks.

How to Plan for Property Taxes

• 1 Set up automatic payments. Many counties offer automatic property tax payments from a bank account. This is the simplest way to avoid missed payments.
• 2 Use the reverse mortgage line of credit. If cash flow is tight, a portion of the reverse mortgage line of credit can be earmarked specifically for property taxes and insurance.
• 3 Check for tax exemptions. Many states offer property tax exemptions or deferrals for seniors. Research what’s available in your parent’s state.
• 4 Assign a family point person. Make sure someone in the family is monitoring property tax payments and insurance renewals each year.

State Property Tax Relief for Seniors

Many states offer property tax relief programs for seniors. These may include:

• Homestead exemptions that reduce the assessed value of the home
• Senior tax freezes that cap property tax increases
• Property tax deferral programs that allow payment to be postponed
• Income-based property tax credits

The availability and details of these programs vary significantly by state. A local tax professional or your county assessor’s office can help identify what’s available.