Reverse mortgage can help seniors cover taxes

Q. Is there an option for those of us whose homes are paid for, yet we are struggling to pay horrendous property taxes? Is it possible to lose a home because I can't afford the taxes?A. Yes, it is. Property taxes are a lien against your home, a financial claim on the property just as a mortgage would be. In fact, taxes take priority over mortgage liens. I hate to break the news, but real estate can indeed be seized and sold for back taxes.With your home free and clear and your income limited, I suspect you may be a senior citizen. If you are 62 or older, a reverse mortgage is an excellent resource for seniors who are struggling to remain in their homes.It's possible to receive income that taps the value, or equity, you've built up in your home. You don't have to prove income or credit, since you won't make any repayments as long as you live in the house.You don't lose ownership. You don't owe tax on the money you receive because it will be paid back (with interest) some day. When you move out or die, the whole debt - plus original closing costs, other fees and interest - must be paid off, often by the sale of the house. If you have an FHA-insured reverse mortgage (a HELC, or Home Equity Conversion Loan), the debt is cleared even if it totals more than the sale price of your home.You can choose to take a lump sum, monthly payments or a line of credit. How much you receive depends on your age and the value of your home. As there is no present mortgage on your home, you could qualify for some substantial help.I am retired on a pension. I sold my home a month ago and am holding the mortgage for five years at 6 percent. On the interest I collect, do I have to declare it on my income taxes next year? If so, what's it called?A. It's called "interest income," and yes, you must declare it. The buyer of your home, on the other hand, can take it as a tax deduction.You may qualify for the home sellers tax exclusion on your sale price, which includes the other portion of those monthly payments you collect. Take all the documents relating to your sale (and your original purchase if you have them) to a professional tax preparer for help with your 2010 return.My son and his fiancee want to buy a house in Fayetteville, N.C. He is training in the Army Special Forces. His fiancee works for a brokerage company (newly hired) and my son just began training. They are hot to buy a house.I have concerns that this is not wise yet. I believe they should rent for the time being. What do you think is the better plan? They have no money down, but they believe the Army has enough incentive plans. True?A. Legal and other costs of buying and selling add up pretty quickly. That means it's probably not wise to buy, unless one expects to remain in the house for at least a few years. At least, that was the conventional wisdom in a normal market such as we had until a few years ago. Today, a lot depends on the particular local market.It sounds as if you're planning on being a mother-in-law (or, as things go these days, a mother-out-law). Frankly, in that situation my best advice is - stay out of it. Or if you absolutely must state an opinion, say whatever it is, but only once.I cosigned for an uncle back in June 2009. I was told that I would be taken off the loan in six months. I want to know what the process is to be taken off the loan.A. I wish you had asked me about this back in June. Until and unless the bank agrees to take your name off the note, you are personally responsible for the whole loan. The debt - as well as the payment record - will show up on your credit report.Only the lender can release you. There's no other way. If "you were told," I hope it was by the lending institution and I hope you got it in writing. Frankly, that doesn't seem likely.Of course, there's no harm in asking the bank how you can be released, perhaps when and if your uncle could prove he's finally qualified to carry the payments on his own.Good luck.bull; Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.2010, Creators Syndicate Inc.