Mortgage Killer Accelerator

Strategy 34 of 107

62 and over: postpone the property tax and pay down the mortgage instead

Depends on people or program rulesFrom a lower cost of the same debt

What it is

Some states let seniors, blind or disabled homeowners postpone current property taxes; the state pays them and records a lien that is repaid when the home is sold.

Steps

  1. Some states let seniors, blind or disabled homeowners postpone current property taxes; the state pays them and records a lien that is repaid when the home is sold.
  2. Compare the program's interest rate with the mortgage rate. It only helps when the program costs less.
  3. Send the monthly escrow amount saved to principal.

Repeat: Apply each year.

Measure: Monthly property tax no longer escrowed.

Try it in the calculator Enter its amount in "Monthly non-income amount to principal". Add a payoff goal of 5 years to see what is still needed.

Risks

  • The postponed taxes and interest are a lien that reduces equity left to heirs.
  • Income and equity limits apply, and not every state offers a program.
  • A lender may require proof the taxes are handled.

Who it fits

Grandmas and grandpas (62 and over)

Needs

62 or older

How predictable

Depends on people or program rules (tenants, family, IRS records, lenders)

A worked example (hypothetical, not guaranteed)

Picture a hypothetical household (grandmas and grandpas (62 and over)). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.

They follow the steps: some states let seniors, blind or disabled homeowners postpone current property taxes; the state pays them and records a lien that is repaid when the home is sold.

Suppose it brings $600 a month on principal from this strategy, not from the paycheck. The loan would be paid off in 16 years 3 months instead of 30 years, saving about $196,219 in interest. To finish in five years, they would still need about $3,374 a month more from other strategies. That is why the five-year sequences stack several at once.

The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.

Sequences that use it

Sources and more information

Where to get help

Related strategies

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