This article follows the case of a family that has lived in Cincinnati for a long time. Their retirement funds are not sufficient. They have a significant equity in their home, which they have been paying off for nearly 30 years. The concern was that the assets they could pass on to their children might decrease. They considered a reverse mortgage but hesitated due to inheritance issues. Such concerns are not uncommon in Cincinnati. This article will follow this situation and examine how reverse mortgages actually affect inheritance assets.

A reverse mortgage is a product that allows homeowners aged 62 and older to receive funds from a lender by using their home equity as collateral. Payments are not made monthly. Instead, funds are received in a lump sum, monthly payments, or as a line of credit. 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. The Home Equity Conversion Mortgage (HECM) is a representative product, and it is the only type of reverse mortgage backed by the federal government.

According to Zillow data, the average home value in Cincinnati as of June 30, 2026, is $254,955. It has increased by 1.1 percent over the past year. In this family's case, they had lived there for nearly 30 years and had paid off most of the principal. This means they have a high equity ratio. If they take out a reverse mortgage, funds will come from this equity. Over time, the loan balance increases, and the equity decreases. The concern that the assets passed on to their children may decrease is a valid concern.

However, it does not completely disappear. The key point is the non-recourse loan structure. Even if the home value falls below the loan balance later, thanks to FHA insurance, heirs are not required to pay the excess. If the home is sold to settle the loan, any remaining amount will go to the heirs. However, how much remains will depend on how much was borrowed and how long it was maintained. This aspect was explained to this family as well.

Costs were also discussed. There is an origination fee. An initial mortgage insurance premium of about 2 percent applies. An annual insurance premium of about 0.5 percent continues to accrue. When closing costs are added, the initial costs are higher than a standard mortgage. Property taxes must also continue to be paid by the homeowner. The effective tax rate in Hamilton County is about 1.53 percent. The effective tax rate varies significantly by area within Cincinnati. Falling behind on property taxes and insurance premiums can lead to a risk of default. This was the most emphasized point for this family.

Eligibility requirements were also reviewed. The homeowner must be at least 62 years old. The property must be the primary residence. If there is an existing mortgage balance, it must be at a level that can be paid off with the loan proceeds. A financial assessment must confirm the ability to continue paying property taxes and insurance premiums. In Ohio, the population aged 65 and older makes up 19.1 percent of the total, which is higher than the national average. This concern about inheritance is likely not unique to families in Cincinnati.

If a family has moved to Cincinnati from another state, there is one more thing to consider. They may have estimated property taxes or insurance premiums based on the previous state, only to find discrepancies with Hamilton County's actual rates, resulting in unexpected outcomes in the financial assessment. Areas with good school districts often have higher tax rates, so it is safer to check this before moving.

Ultimately, this family had two choices left. They could take out only the amount of the loan they needed to preserve as much equity as possible, or they could look for alternative options from the start. This issue can vary depending on each family's financial situation and the thoughts of their children. HECM requires mandatory counseling from a HUD-approved counseling agency before applying. This counseling can specifically address inheritance concerns, and it is advisable to discuss these matters with children beforehand. This is not investment or legal advice, and it is recommended to go through HUD counseling and discussions with family before making any final decisions.