When consulting in New Haven, I often meet people looking into reverse mortgages due to medical expenses. Recently, a client came in worried that their spouse's long-term treatment costs were much higher than expected, and they felt their savings wouldn't be enough. Hospital bills can often be large amounts at once, making it difficult to manage with just monthly savings. In such cases, a common comparison arises: which is better, a Home Equity Line of Credit (HELOC) or a reverse mortgage?

When comparing the two methods side by side, the differences are clear. A HELOC requires monthly interest payments and has relatively strict income assessments. For households with only fixed income after retirement, it can be challenging to meet this income assessment threshold. In contrast, a reverse mortgage allows homeowners aged 62 and older to receive funds against their home as a lump sum, monthly payments, or a line of credit, with repayment occurring when the home is sold, the owner passes away, or the home is no longer used as the primary residence. The lack of monthly repayment obligations is certainly appealing in urgent medical expense situations.

Looking at the housing market in New Haven, as of June 2026, the average home value is $323,843, which has increased by 4.3% over the past year. Within New Haven, there are variations in market prices by area, so it's important to verify the actual equity available based on the specific address. The larger the equity, the more funds can be accessed, but it's also important to consider that if there is an existing mortgage balance, that balance will need to be paid off first.

The property tax aspect is also worth comparing between the two options. The property mill rate in New Haven, based on the 2025 Grand List, is approximately 39.962 mills. Whether it's a HELOC or a reverse mortgage, the obligation to pay property taxes remains the same. However, a reverse mortgage requires a financial capability assessment to ensure the borrower can continue to pay these taxes and insurance from the application stage, and if payments are not maintained, there is a risk of default. On the other hand, a HELOC does not have ongoing financial assessments after the loan is executed, but failing to make monthly interest payments can lead to immediate delinquency.

In terms of costs, reverse mortgages tend to have higher initial burdens. When combining origination fees, mortgage insurance, and closing costs, the initial costs are generally higher than those of a HELOC. However, the non-recourse structure means that if the home value falls below the loan balance in the future, heirs are not required to pay the excess, which is not guaranteed with a HELOC. However, as time goes on and equity decreases, the assets left for children may diminish, which is a clear downside of reverse mortgages.

New Haven has also seen a decrease in mill rates from around 43.88 mills to approximately 39.75 mills in recent years. With budget adjustments, the taxable property values have increased by over 16%, leading to a lower tax rate, but it cannot be assumed that the actual payment amounts have decreased. This is often because as home values rise, tax amounts can also increase. It is essential to develop a habit of checking how the actual burden of properties in one's name changes at each annual reassessment.

As of 2025, 17.4% of Connecticut's population is over 65, indicating a significant number of retired households facing medical expenses. Regardless of the choice made, the answer varies based on individual repayment ability and the scale of medical costs, so if considering a reverse mortgage, it is advisable to undergo mandatory counseling with a HUD-approved agency and discuss thoroughly with family. This article is not investment or legal advice, and consulting with a professional before any actual contracts is recommended.