A customer in Federal Way hesitated while exploring reverse mortgages. They expressed uncertainty about whether it was right to borrow money against their home, which they intended to pass on to their children. So, if they take out a reverse mortgage, will the assets left for their children completely disappear? The answer is no. However, it is important to understand that the remaining equity decreases over time, so the duration of the loan will affect the size of the inheritance. To estimate the value of the assets to be passed down, it's best to evaluate the situation step by step.

First, let's clarify what a reverse mortgage actually is. It is a product for homeowners aged 62 and older that allows them to borrow against the equity in their home. Unlike a traditional mortgage, where payments are made monthly, the lender provides funds to the homeowner in a lump sum, monthly payments, or a line of credit. The principal and interest are settled when the home is sold, the homeowner passes away, or the home is no longer used as the primary residence. The HECM, which is insured by the FHA, is the only type guaranteed by the federal government and is the most widely used.

So, what is the current home value in Federal Way? As of March 2026, the median sale price is around $615,475 (according to Houzeo). This represents a slight increase compared to the previous year. A home of this value indicates that there is significant equity available. The effective property tax rate in King County, where Federal Way is located, is about 0.88 percent of the property value (according to TaxRates). Even after obtaining a reverse mortgage, the homeowner is still responsible for paying this tax. How can this tax be paid? One option is to use part of the cash flow received from the reverse mortgage to cover the tax payments.

What are the eligibility requirements?

• Must be 62 years or older
• The home must be the primary residence
• If there is an existing mortgage, it must be at a level that can be paid off with the loan
• Must pass a financial assessment to confirm the ability to continue paying taxes and insurance

The advantage is that it can create cash flow for living expenses or medical costs without the burden of monthly repayments. It is a non-recourse structure, meaning that if the home value falls below the loan balance later, the heirs are not required to pay the difference.

How can the funds be received? There are options to receive a fixed amount monthly, to receive funds for a set period, to withdraw as needed within a line of credit, or to combine these methods. Which option is more favorable for the inheritance plan will vary by situation, so it's advisable to obtain estimates from multiple lenders and compare the terms before applying.

How should concerns about leaving assets for children be viewed? It is true that as time passes, the loan balance increases and the equity decreases. Additionally, when factoring in origination fees and mortgage insurance (initially about 2 percent, then 0.5 percent annually), along with closing costs, the initial expenses are higher than a traditional mortgage. The responsibility for home maintenance remains with the homeowner during the loan period. If property taxes and insurance cannot be paid, there is a risk of losing the home due to default, which should also be considered.

As of 2024, the percentage of the population aged 65 and older in Washington State is 17.3 percent (according to America's Health Rankings). As more households face similar concerns, there is an increase in exaggerated solicitations targeting seniors. How can these solicitations be filtered out? The most reliable method is to verify through a HUD-approved counselor. Before applying for a HECM, a mandatory counseling session with a HUD-approved agency must be completed, where one can review their situation and the desired asset size to leave for their children. Please make your decision after sufficient discussion with your family. There is no rush to hurry into this decision. This article is not investment or legal advice, and consulting with a professional before applying is recommended.