Savings for NYC Homeowners with Moderate or Fixed Incomes
by Amelia Dunnell April 6, 2018
New York City residents face a high cost of living. In fact, New Yorkers spend up to 39% more on groceries than the average American, eating out can be up to 67% more costly than the national average, and while the average movie ticket in the United States will set you back $8.97, you’d find it hard to spend less than $15 anywhere in the five boroughs. Not to mention, rents are the sixth highest in the nation and property values are through the roof.
Moderate and fixed income homeowners in New York City face a variety of expenses that other NYC residents don’t have to think about; namely property taxes, homeowner’s insurance, and mortgage payments. Mortgage payments in particular are an unavoidable monthly expense – they must be paid, or the lender is entitled to commence foreclosure, which may lead to the loss of the home and its accumulated equity. Foreclosure is particularly dire for low and moderate income homeowners, since they typically hold most of their wealth in the form of equity in their homes, and loss of the home often means they must relocate outside of the city altogether.
In counseling hundreds of homeowners, the City Bar Justice Center has identified some important ways that NYC homeowners can save on monthly expenses to stabilize home ownership and reach affordability.
Shop Around for Insurance
Homeowner’s insurance is a product and, like any other product, there are good and bad deals. Just this past week, we helped a homeowner lower her annual insurance premium from $3,200 to $1,750 in just three short phone calls; a change which would result in monthly savings of more than $120. If your annual premium is over $2,000, or you haven’t checked in a while, consider shopping around for a cheaper policy.
Also, make sure your homeowner’s insurance policy is up to date. If you have let your insurance lapse, your mortgage servicer may force-place a policy, which is typically more expensive than insurance you find yourself and only covers the lender’s interest. If you realize this has happened, simply purchase your own policy and provide evidence of the new policy to your mortgage loan servicer, who will credit you for the period of time in which the force-placed policy overlapped your own.
Apply for an Eligible Exemption on Property Taxes
If you own a home, it’s imperative to stay on top of your property tax payments. Missed payments may accumulate into a lien, which the city may then sell to a third-party investor. Many low-income homeowners who are veterans, disabled, or elderly qualify for tax credits without realizing it and are missing out on significant savings. The following property tax benefits are some of those available to homeowners in New York City:
- School Tax Relief (STAR): There are two levels of STAR: basic and enhanced. Basic STAR is available to homeowners whose annual income is less than $500,000. Enhanced STAR is available to homeowners ages 65 and older with an annual income lower than $86,000.
- Senior Citizens Homeowner’s Exemption (SCHE): To qualify for SCHE, the homeowner must be at least 65 years old, have occupied the property as their primary residence for the last 12 consecutive months, and have annual income lower than $58,399.
- Disabled Homeowner’s Exemption (DHE): Homeowners with disabilities and whose combined annual income (all owners and spouses) does not exceed $58,399 are eligible for DHE. You must be able to provide proof of your disability. Homeowners cannot receive both DHE and SCHE; if you qualify for both, you will receive SCHE.
- Veteran’s Exemptions: There are two types of veteran’s exemptions, the Alternative Veterans Tax Exemption and the Eligible Funds Exemption. The Alternative Veterans exemption is available to eligible veterans of foreign wars, expeditionary medalists, honorable discharges, spouses/widow(er)s of veterans, and Gold Star parents. The Eligible Funds exemption is for veterans who bought homes using “eligible funds,” including pensions, bonuses, insurance, and mustering out pay.
There are several other exemptions available to NYC homeowners. A complete list can be found here.
If you are unsure whether you are already receiving an exemption, check your quarterly property tax statement. You can also check online through the NYC Department of Finance website by entering your property address and following the prompts.
Apply for an Eligible Exemption or Payment Agreement
on Tax and Water/Sewer Liens
If a homeowner fails to make property tax or water/sewer payments over an extended period of time, those accumulated missed payments will turn into a lien. The city may sell the lien at a certificate sale to a third-party investor who can then foreclose on the debt. If there is a lien against your property, the Department of Finance will send you at least four notices before the lien is sold, notifying you of the date of the sale. You should act quickly to avoid the scheduled sale. You may be exempt if you are a senior, veteran, active duty military personnel or disabled and own and live in the home.
If you meet the eligibility requirements, you can mail an exemption application to the Department of Finance, and they will determine whether or not you truly qualify for the exemption. If you are not exempt, you can still enter into a payment agreement with the city up until the day your lien is sold. Working out a payment agreement is a far better option than allowing the certificate sale to go through, as you could face interest rates as high as 12.5 percent post-certificate sale. You can find out more about payment agreements here, and learn more about lien sales in general here.
The next scheduled lien sale is May 17, 2018, so check here to confirm whether your property is listed.
Get Rid of the Car!
Among the most common, most expensive, and mostly unnecessary expenditures in NYC is owning a car. In most parts of the city, cars are essentially a luxury, as we are served by one of the best connected public transportation systems in the nation. The convenience a car affords is certainly tempting, but ask yourself if you really need it. Auto insurance and parking rates are astronomical, and finding street parking can take forever. Drivers also have to factor in the cost of gas and any remaining auto loan payments.
On the other hand, a monthly unlimited MetroCard costs $121, about half the amount you would spend on the average monthly car insurance payment alone. For homeowners who can’t ride the subway due to accessibility issues, the MTA offers Access-A-Ride as a transportation service for people with disabilities at the same cost of a subway fare. You can learn more about Access-A-Ride here. If you don’t qualify but don’t ride the subway for other reasons, even taking a cab or using a ride-hailing app like Lyft, Uber, or Via can be cheaper than owning a car. Citibike is another alternative which combines exercise with transportation (but always wear a bike helmet!).
Of course, there are some justifications for owning a car in New York City. However, if it’s not fulfilling some essential business or other purpose, you should definitely consider going car free. On top of saving yourself money, you’ll be saving the planet too.
There are many opportunities for trimming your budget – the ones discussed in this blog post are just a few. If you would like more tips on budgeting and saving as a homeowner in NYC, check out our podcast on the topic and our accompanying budgeting worksheet.
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