As retirement approaches, many want to keep their long-time home in Albany while reducing property tax burdens. The first question that often arises is, 'Is there a way to access the value built up in this home while still living in it?' During consultations, individuals with these concerns tend to ask similar questions, so let's explore them one by one.

The first question that comes up is, 'What exactly is a reverse mortgage?' It is a loan where homeowners aged 62 and older can receive funds by using their home equity as collateral. Unlike a traditional mortgage, which requires monthly payments, a reverse mortgage allows borrowers to receive funds in a lump sum, monthly payments, or a line of credit from the lender. The loan principal and interest are repaid when the home is sold, the owner passes away, or the home is no longer used as the primary residence. Among these, the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA), is the only type of reverse mortgage backed by the U.S. federal government (according to hud.gov).

The next common question is, 'How much can be utilized in Albany?' According to Zillow, the average home value in Albany is $335,126, which has increased by 4.4% over the past year (as of 2025, Zillow). Naturally, this leads to the question of how much property tax one would owe. The effective property tax rate in Albany County is around 2.16%, which is significantly higher than the national average of 1.02% (according to Ownwell). It's important to note that receiving a reverse mortgage does not eliminate the obligation to pay property taxes.

People also frequently ask how much they can receive. The actual loan limit depends not only on the home value but also on the age of the younger applicant and the interest rate at the time of application. Generally, the older the applicant and the lower the interest rate, the more funds can be accessed. Therefore, even within Albany, results can vary from household to household. During the application process, a financial assessment is conducted to ensure that the applicant can continue to pay taxes and insurance; failing this assessment may make obtaining the loan difficult.

Many also inquire about the costs involved. The origination fee and mortgage insurance premium (MIP, initially around 2% with an additional annual rate of 0.5%) combined with closing costs can result in higher initial costs compared to a traditional mortgage (according to consumerfinance.gov). Additionally, as time passes, the loan balance increases, reducing the equity left in the home, which may decrease the assets passed on to children. It's crucial to understand that failing to continue paying property taxes, insurance, or maintenance costs could lead to the risk of losing the home due to default.

Then, questions about the advantages arise. One benefit is the ability to cover living expenses or medical costs without monthly payments. Additionally, HECM has a non-recourse structure, meaning that if the home value falls below the loan balance later, heirs are not required to pay the difference due to FHA insurance. However, it is advisable to weigh these benefits against the costs and risks mentioned earlier before making a decision.

In New York, the population aged 65 and older makes up 18.9% of the total, which is similar to or slightly higher than the national average (as of 2024). I anticipate seeing more neighbors in Albany facing these concerns in the future. Before applying for HECM, it is mandatory to undergo counseling with a HUD-approved counselor, which can serve as an opportunity to revisit the questions discussed today. Since there are actual scams targeting the elderly related to reverse mortgages, take your time and discuss thoroughly with family before making a decision. This article is not investment or legal advice, and it is recommended to consult with professionals before entering into any contracts.