Many retirees express concerns about their income decreasing while their expenses remain the same. If a household feels that Social Security benefits alone are insufficient for living expenses, it may be worth considering the equity built up in their home. A reverse mortgage is a product that allows homeowners aged 62 and older to borrow against this equity, receiving funds from a lender in the form of a lump sum, monthly payments, or a line of credit, unlike a traditional mortgage that requires monthly repayments. The loan is repaid when the home is sold, the owner passes away, or the home is no longer used as the primary residence.

First, let's check the housing values in Raleigh. According to Redfin data, the median sale price in Raleigh is $425,000 as of June 2026, which is a 3.5 percent decrease from a year ago. While it is a recent adjustment phase, the absolute level of home prices remains relatively high, meaning long-term residents may have significant equity to utilize.

Next, we need to look at property taxes. According to Ownwell data, the median effective property tax rate in Raleigh is 0.87 percent, slightly higher than North Carolina's median of 0.81 percent and lower than the national median of 1.02 percent. Combining the Wake County tax rate and the Raleigh city tax rate results in a cost of approximately $0.9091 per $100 of assessed value. Even if you receive a reverse mortgage, you will still need to pay this property tax and insurance, and you must pass a financial capability assessment to get the loan approved.

Costs must also be clearly outlined. The HECM, insured by the Federal Housing Administration, has higher initial costs than a traditional mortgage due to origination fees, mortgage insurance premiums, and closing costs. However, it is structured as a non-recourse loan, meaning that if the home value falls below the loan balance later, heirs are not required to pay the difference thanks to FHA insurance.

In the case of a family that moved from Raleigh, the actual amount they could borrow was determined by three factors: age, interest rates, and home value. The older the borrower and the lower the interest rate, the higher the borrowing limit. The HECM is only available up to a limit set by HUD. If there is an existing mortgage, the reverse mortgage funds must first be used to pay off that balance.

This family also compared a home equity line of credit and downsizing. A home equity line has lower initial costs but requires monthly repayments, while downsizing provides a lump sum but comes with the burden of leaving a familiar neighborhood. Ultimately, the ability to stay in their current home while supplementing living expenses was the reason they considered a reverse mortgage.

It may also be worth exploring other ways to reduce property tax burdens. North Carolina has a Homestead Exclusion program that exempts a portion of assessed value for homeowners aged 65 and older with income below a certain level. The income criteria and exemption limits can change annually, so it is advisable to check directly with the Wake County tax office or a tax professional.

It is premature to make a decision based solely on these advantages. Over time, the equity remaining in the home decreases, which can reduce the assets passed on to children, and if property taxes or insurance premiums cannot continue to be paid, there is a risk of default. As of 2024, North Carolina's population aged 65 and older is about 18 percent, similar to the national average, and as the retirement population grows, more households are likely to consider these options. In fact, families with multiple children often react more sensitively to the issue of reduced inheritance, so it is important to first listen to each family member's perspective.

Before applying for an HECM, you must undergo mandatory counseling with a HUD-approved counseling agency. There have been cases of reverse mortgage fraud targeting seniors, so it is essential to have thorough discussions with family and seek adequate counseling before making a decision. This article is not investment or legal advice, and it is recommended to consult with a professional before entering into any contracts.