First, let's address a question that came up during a consultation in the LA area. One spouse, nearing retirement, asked if the other spouse, who is not on the title, could consider a reverse mortgage to secure future living expenses. In cities like Los Angeles, where many homeowners have owned their homes for a long time, it's common to first clarify the title structure.

Looking at the numbers, according to Zillow, the average home value in Los Angeles in 2026 is projected to be $949,479, which is a 0.7% decrease over the past year. In Los Angeles County, the median sales price over the last three months is reported to be around $937,000. This number simply indicates that the longer a homeowner has lived in their home, the more equity they typically have compared to their loan balance, which increases the potential funds available through a reverse mortgage.

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 traditional loans that require monthly payments, borrowers receive funds from the lender in a lump sum, monthly payments, or a line of credit, and 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.

If the title is held by only one spouse, there are protections for the non-borrowing spouse that allow them to continue living in the home under certain conditions after the titleholder's death. However, specific requirements such as age and the timing of the marriage registration can vary, so this should be clearly confirmed during the consultation process before applying.

There are three payment options: a lump sum, monthly payments, and a line of credit that can be drawn upon as needed. The line of credit option is often chosen by those who want to keep some funds available for future expenses, as the unused amount tends to grow over time.

The HECM, which is insured by the Federal Housing Administration, is the only type of reverse mortgage backed by the government, and it is a non-recourse loan, meaning that if the home value falls below the loan balance, heirs are not required to pay the difference. The ability to secure cash flow without monthly repayment obligations is a clear advantage.

On the flip side, there are aspects to consider. When you add the origination fees, the initial mortgage insurance premium in the 2% range, and closing costs, the upfront costs can be higher than those of a traditional mortgage. Over time, equity may decrease, potentially reducing the inheritance, and if property taxes and insurance premiums are not continuously paid, there is a risk of default.

In assessing financial capability, credit history, income, and expenses are reviewed comprehensively. If there are any delinquencies in taxes or insurance premiums, a portion of the loan may be set aside specifically for property tax and insurance payments. This is not intended to restrict the use of funds but serves as a safeguard to reduce the risk of default in the future.

The effective property tax rate in California, where Los Angeles is located, averages around 0.71%, but this figure includes existing owners who benefit from Prop 13's lower rates. Recently purchased homes or those pending reassessment typically see rates between 1.1% and 1.3%. The population aged 65 and older in California accounts for 16.5% of the total, indicating that households need to consider both taxes and housing costs after retirement.

If the borrower passes away, heirs can choose one of three options: sell the home to settle the loan, pay off the balance directly and keep the home, or transfer the home to the lender. There have been reports of scams using reverse mortgages as bait, so it's important to be cautious of offers that promise free gifts or special benefits.

Before applying for a HECM, one must undergo mandatory counseling with a HUD-approved counseling agency, and given that scams targeting the elderly related to reverse mortgages have been reported, a careful approach is necessary. Conditions may vary based on title structure and personal circumstances, so it is advisable to discuss thoroughly with family before making a decision.