Recently, an elderly resident from Rochester came in for a consultation, looking worried after seeing a news report about reverse mortgage scams. They were asking whether they should give up on applying altogether due to concerns about such incidents happening to them. Having observed this market for a long time, I have received similar questions many times. In the past, there was a lack of information about reverse mortgages, leading to vague anxieties. Now, however, with the news of scams, people are becoming overly cautious. In this article, I will outline the actual items that need to be checked based on Rochester.

A reverse mortgage is a product that allows homeowners aged 62 and older to receive funds from a lending institution by using their home equity as collateral. Unlike a traditional mortgage, which requires monthly payments, reverse mortgages provide funds in a lump sum, monthly payments, or a line of credit, with the principal and interest being settled when the home is sold, the owner passes away, or the home is no longer used as the primary residence. The HECM, which is insured by the Federal Housing Administration, is the representative product and the only type of reverse mortgage backed by the federal government.

According to Zillow data, the average home value in Rochester as of June 30, 2026, is $252,192, which has increased by 4.3 percent over the past year. While home prices are relatively lower compared to other major cities in New York State, for long-term Korean families, the equity ratio may not be insignificant, especially if they have been paying down the principal for a considerable time. Families that have moved to Rochester from other states should be particularly careful, as they might overlook the differences in property tax rates compared to their previous locations. The main items to check before applying are as follows:

• Age and residency requirements - Must be at least 62 years old and the property must be the primary residence.
• Existing mortgage balance - If there is an outstanding balance, it must be at a level that can be paid off with the reverse mortgage loan.
• Financial capability assessment - Must pass an evaluation to ensure the ability to continue paying property taxes and insurance premiums.
• HUD-approved counseling - Must undergo mandatory counseling from a HUD-approved agency before applying.
• Verification of the other party - Be cautious of contacts that impersonate government agencies or banks and urge you to act quickly, as these may be scams.

There is a reason for going through these items one by one. Passing the financial capability assessment means that the homeowner can continue to manage property taxes and insurance premiums. Monroe County is considered to have a high property tax burden within New York State. According to Ownwell data, Rochester's median effective tax rate is 2.43 percent, which is higher than the state median of 1.90 percent. Even after receiving a reverse mortgage, the homeowner must continue to pay these property taxes and insurance premiums, and failure to do so can lead to default.

In terms of costs, there are origination fees, an initial mortgage insurance premium of about 2 percent, an annual insurance premium of around 0.5 percent, and closing costs, making the initial costs higher than a traditional mortgage. However, there are clear advantages as well. It allows for cash flow for living expenses or medical costs without the burden of monthly repayments, and due to the non-recourse loan structure, even if the home value falls below the loan balance later, heirs are not required to pay the excess thanks to FHA insurance.

However, one downside that has not changed over time is that the equity decreases, reducing the assets left for children. New York State has a steadily increasing elderly population, with those aged 65 and older making up 18.9 percent of the total population, so the demand for such consultations in Rochester is expected to continue to rise.

Ultimately, the most reliable way to avoid scams is to go through a HUD-approved counseling agency. It is essential to be suspicious of any urgent solicitations without counseling, especially those impersonating government agencies or banks. Since tax and mortgage conditions can vary by county and school district, this article is not investment or legal advice, and I encourage you to discuss thoroughly with your family before applying and to seek HUD counseling.