Recently, a question came into our consultation desk. A wife, worried about living expenses, asked if she could apply for a reverse mortgage even though the house is solely in her husband's name. In areas like Long Beach, where many homeowners have lived in their homes for decades, such questions are not uncommon. Even if only one name is on the paperwork, it is a matter that involves both spouses' retirement funding plans.

A reverse mortgage is a product that allows homeowners aged 62 and older to receive funds using their home equity as collateral. Unlike a traditional mortgage, which requires monthly repayments, reverse mortgages provide funds in a lump sum, monthly payments, or a line of credit. The loan principal and interest are settled when the home is sold, the owner passes away, or the home is no longer used as the primary residence. Looking at Long Beach's housing prices gives an idea of how much equity can be accessed. According to Zillow, the average home value in Long Beach is projected to be around $788,693 in 2026. The longer a home has been owned, the more equity there often is compared to the loan balance, increasing the potential for utilization.

If only one spouse is on the title, the situation can become complicated if the other spouse is under 62 or not listed on the title. If registered as a non-borrowing spouse, there are provisions that allow them to continue living in the home under certain conditions after the titleholder's death, but eligibility requirements and procedures vary by individual circumstances. These details should be clarified during consultations with HUD-approved counselors.

It's also important to consider how funds are received. They can be taken as a lump sum, received as monthly payments, or accessed through a line of credit as needed. The line of credit option has a structure where unused limits gradually increase over time, meaning there is no need to withdraw funds in advance if they are not urgently needed.

The HECM (Home Equity Conversion Mortgage), which is insured by the Federal Housing Administration (FHA), is the only type of reverse mortgage backed by the government. It is designed as a non-recourse structure, meaning that if the home value later falls below the loan balance, heirs are not required to pay the excess, allowing for cash flow to cover living or medical expenses without monthly repayment burdens.

However, this is not a decision to be made based solely on advantages. Including origination fees, initial mortgage insurance premiums (MIP) of about 2%, and closing costs, the initial expenses tend to be higher than those of traditional mortgages. As time passes, the loan balance increases while home equity decreases, which can reduce the assets that can be passed on to children. Additionally, property taxes and homeowners insurance must continue to be paid by the owner after taking out the loan, and failure to manage these payments can lead to default and the risk of losing the home.

The effective property tax rate across California, including Los Angeles County where Long Beach is located, is reported to be around 0.71%. However, this average includes rates for long-term owners that have been kept low due to Prop 13. Recently purchased homes or those pending reassessment often face effective tax rates between 1.1% and 1.3%. California has a population of seniors aged 65 and older making up 16.5% of the total, indicating a growing trend of households considering housing costs and tax burdens after retirement.

After the owner passes away, heirs can choose to sell the home to settle the loan, pay off the loan balance directly and keep the home, or transfer the home to the lender. However, there have been reports of exaggerated advertisements targeting the elderly that promise free homes or unnecessary financial products, so it is important to approach unfamiliar offers with caution.

To apply for a reverse mortgage HECM, one must undergo mandatory counseling with a HUD-approved counseling agency. This process allows for a detailed discussion of individual issues such as costs, alternatives, and spouse title matters. Since scams targeting the elderly do exist, it is advisable to take your time and discuss thoroughly with family before making a decision.