One of the most frequently asked questions I receive after observing the real estate market in this area for decades is about reverse mortgages. Questions often start with whether the bank ultimately takes the house, and whether children will inherit nothing, leading to a buildup of misunderstandings. To clarify, a reverse mortgage is a product where homeowners aged 62 and older receive funds from a lender using their home equity as collateral, receiving money in a lump sum, monthly payments, or a line of credit instead of making monthly repayments. The loan is repaid when the house is sold, the owner passes away, or the home is no longer used as the primary residence.

So, in Lansing, the first question is likely about how much equity is available. According to Zillow, the typical home value in Lansing is $145,586 as of 2026, which has increased by 2.4 percent over the past year. Compared to nearby cities like Ann Arbor or Grand Rapids, the absolute price is relatively low, meaning the available equity may also be smaller.

The second most common question is about property taxes. Ingham County, where Lansing is located, has one of the highest effective property tax rates in Michigan at around 1.76 percent. While the actual burden may vary depending on the city or school district, it's important to remember that if you are considering a reverse mortgage in Lansing, being able to continue paying this property tax is one of the key conditions for approval. In fact, the HECM review process includes a financial assessment to ensure you can manage property taxes and insurance premiums.

The third question concerns costs. The HECM, which is 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 a non-recourse loan, meaning that if the home value falls below the loan balance later, heirs are not required to pay the excess amount, which is a clear advantage.

The fourth question is about how much can be borrowed. The loan limit is determined by age, interest rates, and home value, with older borrowers and lower interest rates allowing for larger amounts. HECM is only available up to the limit set annually by HUD, and if there is an existing mortgage, the reverse mortgage funds must first be used to pay off that balance.

The fifth question is whether there are other alternatives. A traditional home equity line of credit (HELOC) has lower initial costs but requires monthly repayments, while downsizing can provide a lump sum but necessitates leaving a long-time neighborhood. The more established the relationships in a community like Lansing, the more cautious this choice may become.

There are also other ways to reduce the burden of property taxes. Michigan has a Principal Residence Exemption program that exempts a portion of school operating taxes for primary residences, and seniors or disabled individuals with income below a certain level can receive a property tax refund through state income tax filings. These exemptions must be applied for separately from the reverse mortgage, and eligibility requirements can change annually, so it's advisable to check directly with the Ingham County Treasurer's Office or a tax professional.

Finally, the most common concern is about the assets that can be passed on to children. It is true that as time goes on, the equity left in the home may decrease, potentially reducing the inheritance. This aspect should not be emphasized solely as a disadvantage; it is important to consider the risk of default if property taxes or insurance premiums cannot continue to be paid. As of 2024, Michigan has a higher percentage of residents aged 65 and older at 19.6 percent compared to the national average, suggesting that many households in Lansing may share these concerns.

Before applying for HECM, it is mandatory to consult with a HUD-approved counseling agency. There are real cases of fraud related to reverse mortgages targeting seniors, so it is essential to have thorough discussions with family and seek advice before making a decision. This article does not constitute investment or legal advice, and it is recommended to consult with professionals before entering into any contracts.