There have been cases where people express their burden every time they receive a property tax bill. After retirement, their income has decreased, but taxes and insurance premiums remain the same or have even increased. In areas like Palm Springs, where the population of retirees is steadily growing, these concerns often arise.

Looking at the recent market, home prices in Palm Springs show a stable trend. According to Redfin, the median sale price in June 2026 is $679,630, which is a 1.5% decrease from the previous year. Homes that have been owned for a long time often have lower or no mortgage balances, allowing for significant equity utilization.

A reverse mortgage is a product that allows homeowners aged 62 and older to receive funds using the equity of their home as collateral. Unlike traditional mortgages, funds can be received in a lump sum, monthly payments, or a line of credit, and there is no monthly repayment requirement. The principal and interest are settled when the home is sold, the owner passes away, or the home is no longer used as the primary residence.

It is important to note that receiving a reverse mortgage does not eliminate the obligation to pay property taxes and homeowners insurance. In fact, to get approved for the loan, one must pass a financial assessment that evaluates the ability to continue paying these two expenses. If the goal is to reduce the burden of property taxes, it may be more appropriate to first check local property tax relief programs or deferral options rather than opting for a reverse mortgage.

The HECM, which is insured by the Federal Housing Administration, is designed as a non-recourse structure, meaning that if the home value falls below the loan balance, heirs are not required to pay the excess. It is often mentioned that it can create cash flow to cover living expenses, property taxes, and insurance premiums without monthly repayment burdens.

There are also options for how to receive the funds. You can choose between a lump sum, monthly payments, or a line of credit that increases over time if not used. If there are monthly expenses like property taxes and insurance premiums, the monthly payment option can help manage cash flow.

It is also good to remember that the funds received are considered a loan. Generally, they are not subject to income tax, but it is wise to check with a tax professional whether they may affect other government benefits or tax filings.

However, when adding origination fees, initial mortgage insurance premiums in the 2% range, and closing costs, the initial costs are higher than those of conventional loans. Over time, equity decreases, reducing inheritance assets, and if property taxes and insurance premiums are not continuously paid, it can lead to default.

During the financial assessment process, credit history, income, and spending history are reviewed. If there is a history of late payments on property taxes or insurance premiums, measures may be taken to set aside a portion of the loan for tax and insurance payments. If you want to manage the burden of property taxes stably, such measures can actually be helpful.

The average effective property tax rate in California is about 0.71%, but this figure is mixed with existing owners maintained at a low rate due to Prop 13, and for those who have recently purchased or are facing reassessment, a realistic rate is between 1.1% and 1.3%. The population aged 65 and older in California makes up 16.5% of the total, indicating a growing trend of households planning for tax burdens after retirement.

After the owner passes away, heirs can choose to sell the home to settle the loan, pay off the loan balance and keep the home, or transfer the home to the lender. There have been reports of exaggerated advertising for reverse mortgages or unnecessary financial products being pushed, so it is advisable to double-check unfamiliar offers.

Before applying for HECM, you must undergo mandatory counseling with a HUD-approved counseling agency. If the goal is to reduce the burden of property taxes, it seems advisable to explore other alternatives during the counseling process and discuss thoroughly with family before making a decision.