When consulting with homeowners nearing retirement in Omaha, there is one key aspect that must be explained first: the mandatory counseling from a HUD-approved counseling agency before applying for a HECM. This is important because many people try to make decisions based solely on product information without understanding this procedure.

A reverse mortgage is a product that allows homeowners aged 62 and older to receive funds by using the equity in their home as collateral. Unlike a traditional mortgage, which requires monthly payments, a reverse mortgage provides funds in a lump sum, monthly payments, or a line of credit. The loan principal and interest are repaid when the home is sold, the owner passes away, or the home is no longer used as the primary residence. The most common type is the HECM, which is insured by the Federal Housing Administration (FHA). The source is hud.gov.

Looking at the housing market in Omaha, recent trends are clearly visible. According to Zillow, the average home value in Omaha is $300,783, which has increased by 1.5% over the past year, and the median sale price as of August 2026 is around $306,750. For homeowners who have been paying off their mortgage for a long time, this equity can become a source of cash flow after retirement.

The ability to secure funds for living and medical expenses without monthly repayment obligations, along with the non-recourse nature of the loan, means that if the home value falls below the loan balance, the heirs are not required to pay the difference due to FHA insurance. This is a key advantage of the HECM.

However, costs and risks must also be considered. The origination fee and mortgage insurance premium (initially around 2%, then about 0.5% annually), along with closing costs, can make the initial expenses higher than a traditional mortgage. Over time, the home equity decreases, and the inheritance assets also diminish. Property taxes and insurance premiums must continue to be paid by the homeowner after the loan is taken out. The average effective property tax rate in Nebraska is about 1.50%, while Douglas County, where Omaha is located, has a higher rate of 1.75% (PropertyTaxRates.org). Failing to pay these can lead to a risk of default.

As of 2024, the population aged 65 and older in Nebraska is about 17.5% of the total (USAFacts). This is similar to the national average, but as the retirement population continues to grow, interest in such products appears to be increasing as well.

It is also important to review the eligibility requirements. Applicants must be at least 62 years old, and the home must be their primary residence. If there is an existing mortgage balance, it must be paid off with the reverse mortgage funds first. A financial assessment must be passed to ensure the ability to continue paying property taxes and insurance premiums. These conditions apply not only in Omaha but nationwide.

The amount that can be received varies based on age, interest rates, and home value. Generally, the older the applicant and the lower the interest rate, the more funds can be accessed. During the HUD counseling, this calculation method, along with other alternatives and future obligations, will be explained. It is advisable to be cautious of proposals that pressure for quick signatures over the phone or in person.

There are other ways to secure funds using the home as collateral. A Home Equity Line of Credit (HELOC) is a representative example. HELOCs require monthly principal and interest payments and have stricter income assessments. While they differ from reverse mortgages in that there is no repayment burden, the initial costs and the rate of equity reduction can be faster, which should also be considered.

HECMs also offer a line of credit option. The unused portion of the line of credit gradually increases over time. If a spouse who is not the borrower lives in the home, there are protections in place that allow them to continue living there even if the borrower passes away, provided certain conditions are met. However, the specific conditions can vary, so it is best to confirm them during HUD counseling.

Returning to the counseling process mentioned earlier, it is essential to undergo counseling with a HUD-approved agency before applying for a HECM. There have been actual cases of fraud related to reverse mortgages targeting the elderly, so it is important not to treat this counseling as a mere formality. If you are considering this product in Omaha, it is advisable to have thorough discussions with the counseling agency and your family before making a decision.