When consulting with Hilo, I often receive questions about whether there are ways to access cash from home equity without selling the house. In simple terms, a reverse mortgage is such a product. If the terminology is unfamiliar, think of it this way: a traditional mortgage involves borrowing money from a bank and repaying it monthly, while a reverse mortgage allows homeowners to receive money from a lending institution using the equity they have already paid off as collateral. This option is particularly appealing to those who do not want to leave their beloved neighborhood and neighbors.

Looking at Hilo's housing market, the median sale price over the past month is $555,000, which is a 0.9% increase compared to the previous year. According to Zillow, the typical home value is reported at $479,998, and this discrepancy arises because sale prices and estimated values are calculated differently. Regardless of which figure you consider, the housing values in the Hawaiian Islands are generally higher than those on the mainland, so households that have owned their homes for a long time likely have significant equity already built up. For those who wish to remain in their current home after retirement, the ability to utilize this equity without moving can be particularly appealing.

To utilize a reverse mortgage, specifically the HECM (Home Equity Conversion Mortgage), there are several requirements. The applicant must be at least 62 years old, the home must be their primary residence, and if there is an existing mortgage balance, it must be at a level that can be paid off with the loan proceeds. Additionally, a financial assessment must confirm that the applicant can continue to pay property taxes and insurance. In simpler terms, this means that while you can access your equity, you are still responsible for paying taxes and insurance.

To elaborate on the tax aspect, Hawaii County applies a property tax rate of $5.75 per $1,000 for owner-occupied homes. This figure is slightly lower than in previous years for the 2026-27 fiscal year, but the risk of losing your home due to inability to manage this burden remains unchanged. While the terminology may seem complex, it can ultimately be summarized by saying that even with a reverse mortgage, the responsibilities of a homeowner remain intact.

Let's also touch on the cost aspect. When you factor in origination fees, mortgage insurance premiums (MIP), and closing costs, the initial outlay is generally higher than that of a traditional mortgage. However, because of the non-recourse structure, heirs are not required to pay the difference if the home value falls below the loan balance later on. Just keep in mind that as time goes on, the equity decreases, which means there may be less to pass on to your children.

The nature of Hilo's market is also worth noting. Hilo has a low transaction intensity index, scoring about 11 out of 100, indicating that transactions are not very active, yet the median sale price is 54% higher than the national average. In simple terms, while properties do not frequently come on the market or sell quickly, the value of homes already owned is not low. Households that have lived in their homes for a long time have ample reason to consider how to utilize this high equity.

As of 2025, Hawaii is projected to have 22.6% of its population aged 65 and older, a rate that is increasing faster than the national average. It seems likely that more households will continue to consider how to utilize their equity after retirement. Even if the terminology feels unfamiliar, going through the mandatory counseling with a HUD-approved agency before applying can help you understand each step, so be sure not to skip that process and discuss it thoroughly with your family. This article is not investment or legal advice, and consulting with a professional before making any agreements is recommended.