A retiree preparing for retirement in Fort Worth recently asked this question: Should I sell my current home and move to a smaller condo, or should I stay in my current home and get a reverse mortgage? It seems helpful to compare these two options side by side.

Downsizing is a method of selling your home to have a lump sum of cash in hand and moving to a smaller place. There are moving costs and real estate agent fees, but you can secure cash without a loan. On the other hand, a reverse mortgage allows you to stay in your current home while cashing out your equity. Simply put, one option involves changing homes, while the other allows you to keep your home and access its value.

Looking at the Fort Worth housing market, as of July 2026, the typical value of homes in the Fort Worth area is about $298,000, which is a decrease of about 2 percent from the previous year. It's also important to consider that during times when home prices are stagnant, the lump sum you receive from downsizing may be less than expected.

A reverse mortgage is a product that allows homeowners aged 62 and older to receive funds from a lender using their home equity as collateral, either as a lump sum, monthly payments, or a line of credit. Instead of making monthly payments, the loan is repaid when the home is sold, the owner passes away, or the home is no longer used as the primary residence. A representative product is the HECM, which is insured by the Federal Housing Administration.

In simpler terms, this means you can secure funds for living expenses or medical costs without moving. Additionally, because of the non-recourse structure, if the home value falls below the loan balance later, the heirs are not required to pay the difference due to FHA insurance.

However, when it comes to costs, the story changes. When you combine the origination fees, mortgage insurance premiums, and closing costs, the initial costs are definitely higher than a standard mortgage. The mortgage insurance premium starts at about 2 percent initially and adds 0.5 percent each year.

Fort Worth has seen significant population growth in recent years, leading to varying trends in home prices depending on the neighborhood. Even within Fort Worth, older neighborhoods and newly developed areas can have significant differences in appraised values, so it's important to go through a formal appraisal to confirm the exact equity amount before applying for a reverse mortgage.

The effective property tax rate in Tarrant County, where Fort Worth is located, is reported to be about 2.24 percent of the assessed value when combining school districts, cities, and counties. Even with a reverse mortgage, these taxes and insurance premiums remain the owner's responsibility, and failure to pay them can lead to default risks. Additionally, as the loan balance increases, the equity decreases, which is a crucial difference to consider compared to downsizing, as it may reduce the assets passed on to children.

A third consideration when weighing these two options is the burden of maintenance. A new home after downsizing may be easier to manage, but if you stay in your current home, you must continue to account for repair and maintenance costs of an aging property. It's also necessary to plan to set aside some of the funds received from a reverse mortgage for these maintenance costs.

I also informed the retiree about alternatives like HELOCs. However, HELOCs typically require monthly repayments, which can be burdensome for those living solely on fixed income, making them different in nature from reverse mortgages. I recommend taking your time and comparing various options. I also noted that the estimated amounts from the first consultation may differ from the final confirmed amounts. The actual loan amount can vary based on the appraisal and interest rate conditions, so it's advisable to compare explanations from multiple consulting agencies.

Ultimately, which option is right depends on individual health status, attachment to the neighborhood, and family circumstances. If considering HECM, you must undergo mandatory counseling with a HUD-approved counseling agency before applying, and during that process, it's advisable to explore other alternatives, including downsizing. This article is not investment or legal advice, and I recommend consulting with family and professionals before making a decision.