A couple nearing retirement visited an office in Miami, worried about how to manage their monthly living expenses. Relying solely on Social Security benefits made it difficult to make ends meet, and while they owned a home, they lacked cash—an all-too-common situation. By comparing ways to maintain their residence and cashing out equity, one can understand why reverse mortgages come into consideration.

A reverse mortgage is a product that allows homeowners aged 62 and older to receive funds from a lender by using their home equity as collateral. Unlike a traditional mortgage that requires monthly repayments, borrowers can choose to receive funds as a lump sum, monthly payments, or a line of credit, with repayment due when the home is sold, the owner passes away, or the home is no longer used as the primary residence. The Home Equity Conversion Mortgage (HECM), insured by the Federal Housing Administration, is the most common type and the only reverse mortgage backed by the federal government. Eligibility requirements must also be considered: the homeowner must be at least 62 years old, the home must be their primary residence, and they must pass a financial assessment to ensure they can continue to pay property taxes and insurance.

The median sale price in Miami was around $545,000 as of July 2026 (according to Momentum Realty). For households that have owned their homes for a long time, this means they likely have significant equity. Recent market data shows that the effective property tax rate in Miami-Dade County averages around 0.83% (TaxByCounty), with considerable variation depending on the area. Checking property tax relief programs like the Homestead Exemption can help reduce the actual burden. For couples like this one, the options of maintaining their residence while converting some equity into cash flow versus selling their home and moving to a smaller place to secure a lump sum can lead to different outcomes. The former allows them to stay in a familiar neighborhood but comes with high initial costs, while the latter, despite the burden of moving, allows for full cash conversion of their asset.

The initial costs of a reverse mortgage include origination fees and mortgage insurance premiums (initially around 2% and about 0.5% annually), along with closing costs, making it more burdensome than a traditional mortgage. Since interest accrues on the loan balance monthly, the home equity decreases over time, which can also reduce the inheritance left for children. Property taxes and insurance premiums must continue to be paid after obtaining a reverse mortgage, and failing to do so can lead to foreclosure, which is a critical point to understand.

On the other hand, due to the non-recourse structure, if the home value falls below the loan balance, heirs are not required to pay the difference thanks to FHA insurance, which serves as a safety net. Florida has a higher percentage of seniors, with 21.75% of the population aged 65 and older, making it one of the states with a significant elderly population (America's Health Rankings). The number of retirement households in Miami facing living expense concerns, like this couple, is expected to continue to rise. Ultimately, this couple chose the monthly payment option to supplement their Social Security benefits, and calculating how much longer they could manage property taxes and insurance helped them make their decision.

Before applying for a HECM, it is mandatory to undergo counseling from a HUD-approved agency, and caution is necessary as scams targeting seniors involving reverse mortgages do exist. The issue of living expenses is not resolved with a single decision; it requires planning for cash flow over the coming years. Couples participating in counseling together to clarify their questions is also important, and through this process, they can develop a concrete plan instead of vague anxiety, as confirmed in various counseling sessions. This article is not investment or legal advice, and consulting with a professional before making any agreements is recommended.