After hearing about scams targeting the elderly involving reverse mortgages in the news, some people worry and ask whether they should completely avoid this product. While it is true that scams exist, it is important to clarify that the system itself is not inherently dangerous.

First, let's look at what a reverse mortgage is. It is a product that allows homeowners aged 62 and older to receive funds from a lending institution by using the equity in their primary residence as collateral. Among these, the HECM (Home Equity Conversion Mortgage) insured by the Federal Housing Administration (FHA) is the only type guaranteed by the federal government. Unlike a traditional mortgage that requires monthly payments, borrowers can choose to receive funds as a lump sum, monthly payments, or a line of credit, with the principal and interest being settled when the home is sold, the owner passes away, or the home is no longer used as the primary residence.

It is also helpful to know the eligibility requirements in advance. You must be at least 62 years old, the property must be your primary residence, and if there is an existing mortgage balance, it must be paid off using the reverse mortgage funds. Regardless of scams, whether this product is right for you can only be determined by comparing it with other options. A Home Equity Line of Credit (HELOC) has lower initial costs but requires monthly repayments, while downsizing can provide a lump sum but requires leaving a familiar neighborhood. The safest approach is to discuss what is best with your family.

So, how much can you actually utilize in Burbank? According to Zillow, as of the end of May 2026, the average home value in Burbank ranges from $1,097,431 to $1,200,952, with some variation in the data. Either way, if you have lived there long enough to pay off your mortgage, it indicates that you have significant equity in the area.

How can you distinguish between scams and legitimate procedures? The biggest difference lies in the counseling process. A formal HECM requires mandatory counseling with a HUD-approved counseling agency before applying. If a specific lender or product is being recommended without question, or if you are pressured to sign or proceed without counseling, that is a red flag to be cautious about.

It is also good to be aware of the costs involved. The average effective property tax rate in Los Angeles County is around 0.69%, which translates to approximately $5,438 annually for a median-priced home of $783,300. Even with a reverse mortgage, the property taxes and insurance premiums must still be paid by the owner, and you must pass a financial capability assessment to ensure you can manage these costs before the loan is processed.

In California, the proportion of the population aged 65 and older is 16.5%, and in areas like Burbank, where there are many older homes, families are consistently considering how to utilize their assets in retirement.

Along with the advantages, please also consider the following points:

• You can create cash flow without monthly repayment burdens, but the initial costs, such as origination fees and mortgage insurance premiums (MIP), are higher than those of a traditional mortgage.
• In a non-recourse structure, heirs are not required to pay the difference, but the remaining equity decreases over time.
• If you cannot continue to pay property taxes and insurance premiums, there is a risk of default.

Ultimately, the scam cases seen in the news are mostly those that bypassed or distorted the formal procedures. If you go through counseling with a HUD-approved counselor and discuss thoroughly with your family before making a decision, you can review this system more safely than you might have feared.

During the counseling process, you will also decide how to receive the funds. If you need monthly living expenses, a monthly payment option may be suitable, while a lump sum may be better for home repairs. Regardless of the choice, the loan principal and interest will accumulate over time, so receiving only what you need is a way to preserve your equity longer.

This article is not investment or legal advice, and it is recommended to consult with a HUD-approved counselor and financial or legal professionals before entering into any actual contracts.