A customer I met in Rapid City was hesitant about exploring reverse mortgages. When I asked why, they expressed a strong desire to leave their home to their children. In such cases, it can be helpful to compare the two options: taking a reverse mortgage versus leaving the home as is.

First, looking at the housing prices in Rapid City, according to Zillow data from May 31, 2026, the average home value is $365,969, which has increased by 1.9 percent over the past year (zillow.com). Recent transaction data from the last six months shows a median sale price of $372,000 (resideline.com, as of August 2026). If there is this much equity in the home, the difference between taking a reverse mortgage and not taking one can grow significantly over time.

If the choice is made to leave the home as is, the equity may remain stable or even increase with market conditions, allowing the asset to be fully preserved for the children. On the other hand, if there is a lack of funds for living or medical expenses, there may be a burden to liquidate other assets or lower the standard of living. Choosing to take a reverse mortgage allows for cash flow without monthly repayment burdens, but as the loan principal and interest accumulate, the equity decreases each year, resulting in a smaller inheritance for the children (hud.gov, consumerfinance.gov).

Cost considerations must also be compared. The initial costs, including origination fees and mortgage insurance, tend to be higher than those of a traditional mortgage, and the average effective property tax rate in South Dakota is 1.09 percent (propertytaxrates.org, as of 2026), which is somewhat higher than the national average. Even after taking a reverse mortgage, property taxes and insurance must continue to be paid, and failing to do so can lead to the risk of default, which is an important point to remember regardless of which option is chosen.

There is also a compromise option between the two choices. One can establish a Home Equity Conversion Mortgage (HECM) as a line of credit, withdrawing only what is immediately needed while leaving the rest untouched. This way, the unused credit can slow down the reduction of equity, and funds can be accessed only when truly necessary. However, in this case, fees or conditions related to the unused credit may vary by product, so it is essential to confirm specifics during the consultation stage.

The proportion of the population aged 65 and older in South Dakota is 18 percent, which is nearly the national average (census.gov, based on 2024 estimates). As a region with a steady retirement population, consultations continue to explore the balance between preserving assets and securing cash flow, and the lack of a single correct answer makes this dilemma even more challenging.

Rather than telling this customer which option is correct, I advised them to first undergo mandatory counseling through a HUD-approved counseling agency and compare the actual numbers before discussing with their children. The decision of whether to prioritize inherited assets or current living expenses ultimately depends on each family's unique situation.

Pennington County, where Rapid City is located, is considered a region with a steady influx of retirees moving in. Due to South Dakota's tax structure, which has no income tax, many retirees are relocating from other states, but it is important to remember that property taxes must still be paid separately. If the previous state had an income tax, it is practical to reallocate that burden into property taxes and maintenance costs. This calculation can also be reviewed during the HUD counseling process. It is advisable to include maintenance costs that vary by region, such as winter heating expenses, in these calculations. This article is not investment or legal advice, and consulting with a professional before any actual contracts is recommended.