Reverse mortgage in South Dakota

Under state law, payments from a reverse mortgage South Dakota homeowners use to convert equity into cash are not income but a loan. As long as you live in the home, you don't make monthly payments on the loan. In South Dakota, 7 of 56 recent FHA loans helped buyers buy a home, while 3 reached the $1,249,125 federal cap.

South Dakota Chapter 54-12: rules for borrowers

A reverse mortgage is defined in section 54-12-20 of South Dakota Codified Law 54-12 as a loan on real property, and it is nonrecourse. Because it's nonrecourse, you or your heirs will never owe beyond the home's value at repayment. SDCL 54-12-21 lets you pay off part or all of the balance early with no penalty, so you can sell at any time your plans change.

You're also protected by state law when you travel or stay in the hospital. Under SDCL 54-12-21, your loan can't be called due just because you're away from home for as long as 60 straight days. Absences up to 1 year are protected as well, as long as you secure the home in a way your lender accepts. Before you leave on a long trip, call your lender to show the property is safe.

SDCL 54-12-22 treats reverse mortgage payouts as loan proceeds, not income, when you apply for state aid. Since the law covers property tax relief, getting loan advances won't keep you from qualifying for state tax help.

Could the Assessment Freeze or Tax Refund in South Dakota shrink your bill?

Yes, your bill can drop under 2 state programs if your income qualifies. Nationwide, federal rules for reverse mortgages require that you pay property taxes plus homeowners insurance. You also must live there as your main home and keep the house in good condition. Getting behind on taxes can trigger a default on your loan and let the lender demand repayment, so tax relief can make a real difference.

The Assessment Freeze for the Elderly and Disabled holds your home's taxable value steady so that rising market prices don't push your tax bill higher. Owning your single family home and living in South Dakota for 5 years are required, along with being 65 or older or disabled. Sioux Falls tax figures list income limits for a multiple member household under $66,885 and under $56,595 for someone alone; a market value cap also applies. Every year, turn in your application to the county treasurer by April 1.

Smaller budgets get help from the yearly Tax Refund for Senior Citizens and Citizens with Disabilities. You need to be 65 or older, or disabled, and your annual income can't go above $17,215 for an individual or $23,265 for a household. You can apply between May 1 and July 1.

Property tax delay at 70 through the Homestead Exemption

A surviving spouse, or anyone 70 or older, can delay paying property taxes until the home sells under the Property Tax Homestead Exemption. You'll still need to meet the state's income and residency rules, but what you receive from a reverse mortgage doesn't count toward your income limit.

What oversight does the South Dakota Division of Banking have over lenders?

The South Dakota Division of Banking, which sits within the Department of Labor and Regulation, oversees reverse mortgage lenders across South Dakota. Its supervision also covers mortgage brokers, loan originators and banks chartered by the state. A lender that fails to make required loan advances faces an administrative penalty issued by the Division of Banking under SDCL 54-12-21. When the lender doesn't cure that default, it also can no longer collect interest. When a lender violates these rules, you can submit a complaint online through the Division of Banking.