Last month, a couple who visited the Oklahoma City office was worried about how to cover their monthly living expenses and medical bills after retirement. They had already paid off their home, but their cash reserves were not sufficient, and they did not want to sell their current home to move to a smaller place. Such consultations have definitely increased compared to the past. With the growing Korean retiree population in Oklahoma City, there are noticeably more households that have homes but lack cash flow.

One option to consider in such situations is a reverse mortgage. This is a loan product where homeowners aged 62 and older can receive funds by using their home equity as collateral. Unlike a traditional mortgage, where payments are made monthly, a reverse mortgage allows homeowners to receive funds in a lump sum, monthly payments, or a line of credit from the lending institution. The principal and interest are settled when the home is sold, the owner passes away, or the home is no longer used as the primary residence. The most common product is the HECM (Home Equity Conversion Mortgage), which is the only type of reverse mortgage insured by the Federal Housing Administration (FHA).

Looking at the housing market in Oklahoma City, the average home value based on Zillow is around $209,117 (as of May 31, 2026, a 0.3% decrease over the past year). Other estimates range from $229,000 to $280,000, so it's important to consider that the figures can vary depending on the source. When assessing the available equity, it's good to refer to these price ranges, but keep in mind that the actual loan amount will depend on the appraisal, age, and interest rates.

There are three main things to check in order. First is the eligibility requirements. You must be at least 62 years old, the home must be your primary residence, and if there is an existing mortgage balance, it must be at a level that can be paid off with the reverse mortgage loan. You also need to pass a financial assessment to ensure you can continue to pay property taxes and insurance. Second is the costs. The origination fee, an initial mortgage insurance premium (MIP) of about 2%, plus an annual fee of around 0.5%, combined with closing costs, make the initial costs higher than a traditional mortgage. Third is the property tax. According to the Tax Foundation, Oklahoma's effective property tax rate is 0.79%, which is lower than the national average, but the obligation to continue paying remains unchanged. Since tax rates can vary by county, be sure to check the exact rate for the area you plan to purchase in.

There are clear advantages. You can secure cash flow without the burden of monthly repayments, and because it is a non-recourse loan structure, if the home value falls below the loan balance, heirs are not required to pay the excess due to FHA insurance. However, it is important to note that over time, the home equity decreases, which means the assets passed on to children will also decrease, and if property taxes or insurance cannot be paid, it could lead to default.

A commonly overlooked aspect of reverse mortgages is that interest accumulates on the loan balance each month. Since it is a non-repayment structure, the balance grows over time, reducing the remaining equity. After the owner's death, heirs can either sell the home to pay off the loan, buy it directly at 95% of the appraised value or the loan balance, whichever is lower, or transfer the home and settle it. Regardless of the choice, a decision must be made within a specified timeframe, so it is advisable to discuss this with children beforehand.

According to the U.S. Census Bureau, about 17% of Oklahoma's population is aged 65 and older (2024, USAFacts), making it one of the regions with a steadily increasing retiree population. Amid this trend, interest in reverse mortgages is growing, but it is also important to remember that scams targeting the elderly do exist. HECM applications must go through mandatory counseling with a HUD-approved counseling agency, and this process is not just a formality; it is a chance to assess whether it fits your situation. It is recommended to discuss thoroughly with children or spouses and, after the counseling, to take your time to compare various options. This article is not investment or legal advice, and it is recommended to consult with a professional before making any actual decisions.