Retired families in Brooklyn often find themselves in urgent need of funds for medical expenses. They may have savings, but it's hard to spend it all on healthcare. They own a home but lack cash. In such situations, many inquire about reverse mortgages.

A reverse mortgage is available to homeowners aged 62 and older. It allows them to borrow against the equity in their home. There are no monthly repayments; instead, they receive funds in a lump sum, monthly payments, or a line of credit. Repayment occurs when the home is sold, the owner passes away, or the home is no longer used as the primary residence. The most common product is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). This is the only type of reverse mortgage backed by the U.S. federal government (according to hud.gov). The application requirements are clear: the applicant must be at least 62 years old, the home must be the primary residence, and any existing mortgage balance must be manageable with the loan amount. A financial assessment must also confirm the ability to continue paying taxes and insurance. The actual loan limit varies based on the home's value, the age of the younger applicant, and the interest rate. Generally, the older the applicant and the lower the interest rate, the more they can borrow.

As of the last three months, the median home price in Brooklyn is around $1.15 million, which is a 4.5% increase from a year ago (2026 data, according to Redfin). The effective property tax rate in Kings County, which includes Brooklyn, is approximately 0.69% (according to Ownwell), which is lower than the New York state average. However, this does not eliminate the obligation to pay property taxes. Even with a reverse mortgage, the homeowner is still responsible for property taxes and insurance premiums.

It's also essential to check the costs involved. There are origination fees, mortgage insurance premiums (MIP), and closing costs. The MIP is initially around 2% and adds about 0.5% annually (according to consumerfinance.gov). The upfront costs are higher than those of a traditional mortgage. Over time, the loan balance increases, and the homeowner's equity decreases. This can reduce the assets passed on to children. If the homeowner cannot continue to pay property taxes, insurance, and maintenance costs, there is a risk of default. It's crucial not to overlook these aspects, even when facing urgent medical expenses. The same goes for maintenance costs; there is an ongoing obligation to keep the home in a certain condition.

There are clear advantages as well. Homeowners can secure cash flow for medical expenses without monthly repayments. HECM loans are non-recourse, meaning that if the home value falls below the loan balance, the heirs are not responsible for the difference, thanks to FHA insurance. However, this advantage should be weighed against the costs and risks mentioned earlier. The loan balance accrues interest monthly, and it's wise to check this rate in advance. The loan limit varies based on home value, age, and interest rate. Generally, the older the applicant and the lower the interest rate, the more they can borrow. It's better not to delay consultations and to check various factors in advance. The financial assessment is a necessary step that must be passed. Rushing can lead to missing important details.

In New York, 18.9% of the population is aged 65 and older (2024 data). It is expected that more families in Brooklyn will seek consultations due to concerns about medical expenses. Before applying for HECM, a mandatory consultation with a HUD-approved counselor is required. During this consultation, it's advisable to review the medical expense situation and financial plans. There are actual scams targeting seniors involving reverse mortgages. Be particularly cautious of approaches via phone or door-to-door sales. Attending consultations with family or trusted individuals can also be helpful. There's no rush; it's okay to discuss with family before making a decision. This article does not constitute investment or legal advice. Please consult a professional before entering into any contracts.