One of the first concerns that comes to mind is how to cover suddenly increased medical expenses. An elderly person who consulted in Sacramento felt the same way. After retirement, unexpected hospital bills piled up within a fixed income, and they were weighing whether to dip into savings or leverage their home equity.

Dipping into savings may provide a short-term solution, but it reduces the remaining retirement funds. On the other hand, using a reverse mortgage allows one to preserve savings while accessing funds through home equity. This structure allows homeowners aged 62 and older to borrow against their home, receiving funds in a lump sum, monthly payments, or a line of credit without monthly repayments.

Looking at Sacramento's housing prices can give an idea of the scale of this equity. According to Zillow, the average home value in Sacramento in 2026 is $480,488, and the median sale price in Sacramento County over the last three months is around $538,000. The longer one has lived in their home, the more equity they likely have, providing a buffer for unexpected expenses like medical bills.

The HECM, insured by the Federal Housing Administration, is the only type of reverse mortgage backed by the government. It is a non-recourse structure, meaning that if the home value falls below the loan balance, heirs are not required to pay the difference. The ability to create cash flow without depleting savings is a clear advantage when faced with sudden expenses like medical bills.

The amount one can receive is determined by age, home value, and the interest rate at the time of application. The older one is, the higher the home value, and the lower the interest rate, the larger the limit.

If property taxes are a burden, California's property tax deferral program is also worth checking out. This program is aimed at low-income homeowners aged 62 and older who meet income requirements.

There are also options for how to receive the funds. If the expenses are regular, like medical bills, receiving a fixed amount monthly may be suitable. If a lump sum is needed, that option is available, or if expenses are unpredictable, a line of credit can be chosen. The line of credit also has the feature of increasing the limit over time as it is not used.

However, unlike dipping into savings, reverse mortgages come with initial costs. When adding origination fees, initial mortgage insurance premiums in the 2% range, and closing costs, there are significant expenses from the start. Over time, equity decreases, which may reduce the assets left for children, and if property taxes and insurance premiums are not continuously paid, there is a risk of default.

During the financial assessment process, credit history, income, and expenses are reviewed together. If there is a history of late tax payments, a portion of the loan may be set aside for property taxes and insurance premiums. It is also good to know that there are safety measures in place, separate from just securing funds for medical expenses.

The effective property tax rate in California averages around 0.71%, but this is an average that includes existing owners who are capped low due to Prop 13. Recently purchased homes or those pending reassessment typically face rates between 1.1% and 1.3%. The population aged 65 and older in California makes up 16.5% of the total, indicating that households weighing between savings and equity utilization will likely continue to grow.

After the owner passes away, heirs can choose to sell the home to settle the loan, pay off the balance and keep the home, or transfer the home to the lender. There have been reports of scams targeting seniors related to reverse mortgages, so it is wise to be cautious of free benefits or pressure to act quickly.

Before applying for HECM, one must undergo mandatory counseling with a HUD-approved counseling agency. Whether to dip into savings or utilize equity is not a question with a predetermined answer. It is advisable to seek counseling and discuss thoroughly with family before making a decision.

HUD counseling can be conducted in person, over the phone, or online. After completing the counseling, a certificate is issued, which is required to begin the loan application process.