A customer living in Bellevue faced two options. Should they sell their current home and downsize to a smaller one, or stay in their current home and cash out equity through a reverse mortgage? In simple terms, downsizing is a way to generate a lump sum by moving, while a reverse mortgage allows homeowners to continue living in their home while accessing some of its value in cash. The right choice depends on where one wants to live, health status, and asset planning. Both methods do not have a definitive answer; the choice varies based on how one envisions the coming years.

If reverse mortgages are unfamiliar, think of it this way: it is a product where homeowners aged 62 and older receive money from a lender using their home equity as collateral. Unlike traditional loans, instead of making monthly payments, the lender provides funds to the homeowner in a lump sum, monthly payments, or a line of credit. The principal and interest are settled when the home is sold, the homeowner passes away, or the home is no longer used as the primary residence. Among these, the HECM, which is insured by the FHA, is the only type guaranteed by the federal government and is the most commonly used.

Home prices in Bellevue are relatively high compared to other areas. As of March 2026, the median sale price is around $1.5 million (according to Houzeo). In simple terms, this means that the amount of equity available for a reverse mortgage is substantial. However, the effective property tax rate in King County, where Bellevue is located, is about 0.88 percent of the property value (according to TaxRates). This means that as home prices rise, the amount of taxes owed each year also increases, which should be factored in. It is easy to understand that home prices and taxes move together.

To summarize the eligibility requirements, they are as follows:

• Must be 62 years or older
• The home must be the primary residence
• If there is an existing mortgage, it must be at a level that can be paid off with the reverse mortgage loan
• Must pass a financial assessment to ensure the ability to continue paying taxes and insurance

If these requirements are met, one can secure cash flow for living expenses without monthly repayment burdens. The non-recourse structure is also an advantage, as heirs are not required to pay any excess if home values decline.

In simple terms, there are multiple ways to receive funds. Payments can be received monthly, for a set period, or withdrawn as needed within a limit. It is also possible to mix different methods. The best approach depends on individual living expense patterns, so it is recommended to obtain estimates from multiple lenders to compare fees and terms.

Now, let's address the costs and risks that must be understood. The origination fee and mortgage insurance premium (initially about 2 percent, then around 0.5 percent annually), along with closing costs, make the initial costs significantly higher than a traditional mortgage. Over time, the loan balance accumulates while home equity decreases, which means that the assets passed on to children may be reduced. It is also easy to overlook that the obligation to maintain the home remains with the owner during the loan period. Additionally, if property taxes or insurance premiums cannot be paid, there is a risk of default, which could lead to losing the home.

As of 2024, the percentage of the population aged 65 and older in Washington state is 17.3 percent (according to America's Health Rankings). This indicates that more households are considering how to utilize their assets after retirement. Consequently, exaggerated solicitations targeting the elderly are also increasing, so caution is necessary. In simple terms, if an unverified company contacts you first, it is advisable to take a step back. To apply for a HECM, one must first undergo mandatory counseling with a HUD-approved counseling agency. This counseling helps verify whether the situation truly fits, and it is recommended to discuss thoroughly with family before making a decision. This article is not investment or legal advice, and consulting a professional before applying is advised.