Glossary term
Property Charges
Property charges are homeownership costs a reverse-mortgage borrower must keep paying, such as property taxes, homeowners insurance, and certain other required property-related obligations.
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What Are Property Charges?
Property charges are homeownership costs a reverse-mortgage borrower must keep paying. They commonly include property taxes, homeowners insurance, and certain other required property-related obligations.
The term matters because a reverse mortgage can remove the standard monthly mortgage payment on the borrowed amount, but it does not remove the ongoing costs of owning the home.
Key Takeaways
- Property charges are ongoing property-related obligations tied to the home.
- In reverse-mortgage planning, they usually include taxes, homeowners insurance, and sometimes other required charges.
- Borrowers must keep property charges current to stay in good standing.
- Falling behind can cause the loan to become due and payable.
- Property charges are one reason a reverse mortgage may not solve a housing-cost problem by itself.
What Can Count as Property Charges
CFPB's reverse-mortgage key terms describe property charges as obligations such as property taxes and homeowners insurance, and when applicable, flood insurance, ground rents, condominium fees, planned unit development fees, homeowners' association fees, and special assessments.
The exact list depends on the property and loan documents, but the planning point is straightforward: the borrower still has to keep the home financially current.
Why They Matter in Retirement
For retirees, property charges can be a hidden stress point. A borrower may no longer have a standard monthly mortgage payment on the reverse-mortgage proceeds, but taxes, insurance, HOA dues, repairs, and maintenance can still rise. If those costs are already difficult, a reverse mortgage may create liquidity while leaving the core housing-cost problem unresolved.
Before using home equity for income, the household should test whether property charges remain affordable under the one-person and later-life versions of the retirement plan.
The Bottom Line
Property charges are the ongoing property-related costs a reverse-mortgage borrower must keep paying, such as property taxes, homeowners insurance, and certain other required obligations. They are central to reverse-mortgage planning because falling behind can put the loan and the home at risk.