The Mercury News had a feature from a national news service in this weekend's Real Estate section. The cover story described an older Florida couple who wanted to downsize from the home that had become too large for them once their children were gone. Unfortunately, they discovered that by leaving their big house for a two bedroom home, their property taxes would more than triple. This couple decided to free some of their equity with a reverse mortgage, and stay in their too-large home. My sister and her husband, who also live in Florida, are in a similar situation. They would love to sell their house and move into a new development nearby, but are trapped by the possibility of a huge increase in property taxes.
Because of Proposition 13, and its outgrowths, Props. 60 and 90, California homeowners are not put in this position. If they are over 55, they can "move down" to a smaller, or less expensive home and retain their existing taxes. If they want to stay in their existing home, a reverse mortgage is still always a possibility.
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