Home Equity Options for Seniors in Riverside County

Property Tax Relief Programs Available in Riverside County

Property tax relief comes first because it lowers a bill you pay every year, whichever other choice you make. In Riverside County, the Treasurer-Tax Collector mails secured property tax bills in October. The county's tax calendar gives the payment dates:

• First installment. It is due November 1 and becomes delinquent after 5:00 p.m. on December 10, when a 10% penalty is added.
• Second installment. It is due February 1 and becomes delinquent after 5:00 p.m. on April 10, when a 10% penalty and a cost are added.

If a delinquent date falls on a Saturday, Sunday or county holiday, it moves to the next business day.

The Homeowners' Exemption. California law sets this exemption at $7,000 of the dwelling's full value under Revenue and Taxation Code section 218. The exemption does not extend to a home that is rented, vacant or a second home. The Riverside County Assessor-County Clerk-Recorder says the exemption saves about $70 a year. Eligibility is based on occupying the home as a principal residence on January 1. The full exemption is available if you file by 5 p.m. on February 15. If you file between February 16 and 5 p.m. on December 10, 80 percent of the exemption is available. There is no fee to file. Once the exemption is granted, it continues as long as you own and live in the same home.

State property tax postponement. The California State Controller's Office runs a program that lets qualifying older homeowners put off paying property taxes. The postponed amount becomes a lien on the home in the state's favor. The Controller sets the age and income conditions and publishes the current figures and deadlines. Under Revenue and Taxation Code section 20583, the home must be the claimant's principal residence and the claimant must receive a secured tax bill. The owners also need equity of at least 40 percent of the home's value, and that test applies each time a claim is filed.

Lowering a bill you already pay every year can change what the other choices need to do for you.

When the House Needs Work: Repair Help in Riverside County

Sometimes the money is needed for a leaking roof or a failing water heater. Help with the repair itself may mean less borrowing, or none.

The Riverside County Office on Aging says it runs more than 27 programs for older adults, adults with disabilities and family caregivers across the county. These include information and assistance through HelpLink, care coordination and case management, meal services, a long-term care ombudsman, and the Health Insurance Counseling and Advocacy Program (HICAP). The office says its programs are free to people who meet each program's minimum qualifications.

Riverside County Housing and Workforce Solutions and the Housing Authority of the County of Riverside are county housing agencies. Their programs and income rules change over time, so each agency is the place to ask what it currently offers to older homeowners.

The U.S. Department of Agriculture also runs a federal home repair program for rural homeowners, known as Section 504. USDA Rural Development decides which areas count as rural and who is eligible.

If a repair program covers the work, you may not need to borrow against the home at all.

Home Equity Loans and Lines of Credit: How They Work for Older Homeowners

A home equity loan is a lump sum borrowed against the home, repaid in fixed monthly installments over a set term. A home equity line of credit, or HELOC, works more like a credit card secured by the house. During a "draw period" the borrower can draw funds as needed. A "repayment period" follows, when the balance is paid back.

For someone on a fixed income, the key point is that both require regular monthly payments. The lender looks at income, credit and how much equity there is. Social Security or a pension counts as income for an application, and the lender makes the credit decision. Age alone is not the test.

The trade is the collateral, meaning property pledged to secure a loan. Here it is the home, so missed payments put the home at risk. Interest rates and costs vary by lender and over time, and the lender discloses them. A look at home equity options for seniors compares who pays each month under each choice.

Cash-Out Refinancing: Replacing Your Mortgage to Access Equity

A cash-out refinance replaces the current mortgage with a new, larger one, and the homeowner receives the difference as a lump sum. The new loan usually comes with a new interest rate and a new repayment term, and monthly payments continue.

The trade is a bigger balance and a payment that keeps going. If the home is paid off, a cash-out refinance creates a new monthly bill where there was none. Some homeowners look at this option when rates available now compare well with the rate on their existing mortgage. For a household on a fixed income, the new payment is the number to weigh against the monthly budget. The lender sets and discloses the rate, terms and costs. The home is collateral here too.

Reverse Mortgages: What They Are and How They Work in California

A reverse mortgage lets a homeowner borrow against the home without making monthly mortgage payments. The Consumer Financial Protection Bureau explains that the title stays in your name. Interest and fees are added to the balance each month, so the amount owed grows over time.

Borrower duties. Borrowers are required to pay property taxes and homeowners insurance, use the home as their principal residence and keep it in good condition. Under federal law, repayment is generally deferred until the homeowner dies, sells the home, or another event in HUD's regulations occurs. In practice, the loan comes due when the last borrower dies, sells or moves out. Missing taxes or insurance can also bring the loan due.

HECM. According to HUD, the only reverse mortgage insured by the federal government is the Home Equity Conversion Mortgage (HECM). It is available only through a lender approved by the Federal Housing Administration (FHA). Under 12 U.S.C. § 1715z-20(b) and (d), the homeowner, or the homeowner's spouse, must be at least 62, or a higher age HUD may set. HUD says the amount available depends on factors including the age of the youngest borrower or eligible non-borrowing spouse. HUD publishes the current HECM limit.

Payment options. Under 12 U.S.C. § 1715z-20(d)(9), the lender may pay under one of these methods:

• a line of credit;
• monthly payments for a term the borrower chooses;
• monthly payments for a term, combined with a line of credit;
• monthly payments for as long as the borrower lives in the home;
• tenure payments combined with a line of credit; or
• another basis HUD approves.

All payments are subject to lender approval and the loan's terms. Federal rules limit the origination fee, and the lender discloses it.

Counseling. Federal law requires counseling from an independent, HUD-approved counselor before a HECM. The counselor must discuss options other than a reverse mortgage. HUD's page points to its HECM Counselor Roster and the number (800) 569-4287.

California protections. Civil Code section 1923.2 adds several protections:

• Counselor list. The lender must give the borrower a list of at least 10 HUD-approved counseling agencies.
• Waiting period. The lender may not accept a final application or charge fees until seven days after counseling.
• No annuity requirement. The lender may not require the borrower to buy an annuity.
• Absences. Absences of up to 60 consecutive days do not make the loan due. Longer absences of less than a year do not make it due if the borrower has taken steps, as the loan documents require, to secure and protect the home.

Selling or Downsizing: When Moving Is Worth Talking About

Selling is a real option, not a failure. It turns the equity into cash in full. It ends the mortgage payment, and it ends the tax bill and the upkeep on that house. The proceeds can go toward care or retirement.

The trade is leaving a home and neighbors you know. Moving costs, the price of the next home or rent, and possible capital gains tax all come into the picture. A tax professional can explain how capital gains rules apply to a particular sale.

For a homeowner who buys again, Proposition 19 may help. The Assessor's Proposition 19 page explains that owners aged 55 or older can transfer their property tax base to a replacement home. This applies to transactions on or after April 1, 2021. The replacement is purchased or built within 2 years of the sale. It can be anywhere in California, at any value. There is no adjustment to the transferred base if the new home is of equal or lesser value. The Assessor defines that as:

• 100% of the original home's market value if the replacement is bought before the sale;
• 105% if it is bought in the first year after the sale; and
• 110% if it is bought in the second year after the sale.

A new owner may also receive a supplemental tax bill. The Assessor says this bill comes directly to the owner, not to a mortgage company, and can take up to a year to arrive.

For some families, this conversation turns out to be the one that opens up the most room to move forward.

Riverside County Resources for Senior Homeowners

This is a starting list, not a complete one. It applies wherever in the county the home sits.

• Riverside County Assessor-County Clerk-Recorder. Handles the Homeowners' Exemption and Proposition 19 transfers.
• Riverside County Treasurer-Tax Collector. Sends bills and handles past-due taxes. Its delinquent tax pamphlet explains what happens if taxes go unpaid. Unpaid taxes at 5 p.m. on June 30 make the property "tax defaulted." Penalties of 1½% a month and a redemption fee then begin. An installment plan can spread the back taxes over five years, with a payment of 20% or more by each April 10. After five years in default, the property becomes subject to sale.
• Riverside County Office on Aging. Offers information, case management and HICAP.
• Housing and Workforce Solutions and the Housing Authority of the County of Riverside. The county's housing agencies.
• California State Controller's Office. Runs property tax postponement.
• HUD's counselor roster. Lists approved reverse mortgage counselors. The CFPB's counselor questions can help in preparing for that meeting.

The rules for HECMs and for California reverse mortgages are the same in every county. The guide to San Diego County options shows how another county's offices compare.