Is a Reverse Mortgage Actually Good for Las Vegas Retirees?
Reverse mortgages can help some retirees stay in their homes longer, but they can also create confusion when the homeowner or their family eventually decides it is time to sell.
I’ve heard very different stories from Las Vegas homeowners, which is why this is not a one-size-fits-all decision.
Today, I want to share what homeowners should understand and how a reverse mortgage can affect a future home sale.
PART 1 — Why Homeowners Consider taking out a reverse mortgage
Most of the time, it comes down to a few things: reducing monthly financial pressure, accessing built-up equity without having to move. For many of my clients the priority is being able to stay in a home they’ve lived in for years and not have to move. Some clients want to paying off an existing mortgage to free up monthly expense and have the cash flow for other expenses.
I did another video about Reverse Mortgages and a gentleman named Alan, left a comment that video that really captured this. He’s 71, living alone after a later-in-life divorce, with no one left to leave the home to. His Social Security isn’t much, and he’s genuinely weighing whether a reverse mortgage is right for him.
That’s a real example of the “why.” Alan isn’t trying to get rich off his equity, he’s trying to stay steady on a tight income. That’s a very different situation than a couple in their 60s who are still working and just want breathing room. Which brings me to my next point.
PART 2 — Why Every Experience Is Different
Here’s the thing: the loan product might be the same, but the outcome is almost never the same for two homeowners. It depends on how much equity you have going in, whether there’s an existing balance to pay off first, so rather than starting at zero – you refinance another loan and start at that balance amount maybe around $200,000 or more. It depends upon how long you stay in the property since the monthly payment is added to your balance the balance grows every month you’re there. It depends on your personal finances outside the house, and your family’s inheritance plans.
I got some thoughtful comments after my last video that drove this home. One viewer, who works as a reverse mortgage counselor, wrote that not everyone’s retirement looks the same, that she counsels doctors, lawyers, pastors, and homemakers alike, and that with the right plan, you can absolutely leave the home with significant value if that’s your goal.
Another viewer, who’s been living with a reverse mortgage himself for four years, made the point that this product isn’t for everyone, but can be good if you go in fully informed.
One of the biggest points people shared with me is that you cannot look at someone else’s experience and assume yours will play out the same way. It’s not cookie-cutter, and treating it like it is can set you up for a rough surprise.
For those of you who are new here, I’m Leslie Carver, a Las Vegas and Henderson real estate advisor. I work with homeowners and retirees who are deciding whether to stay in their current home, downsize or sell and move into something that better fits this stage of life. My contact information is below and be sure to subscribe for more Las Vegas retirement and real estate information.
PART 3 — What Happens When the Home Is Sold or the borrower passes away
Now let’s talk about the part that brings people to me: what happens when a home with a reverse mortgage gets sold or the borrower passes away. This is where I often come in after the reverse mortgage has been in place for some time and my clients want to sell the home.
I have a listing right now in Sun City Anthem. The brother passed away and he didn’t have kids, so he left everything to his niece and nephews. He has a reverse mortgage. Luckily there is still equity in the home. The administrator is his sister. She had an estate sale held at the home and we made arrangements to have the home painted and cleaned. We moved quickly but the lender immediately started the foreclosure process once they found out the borrower was deceased. They have filed a notice of default and they are adding in costs for the attorney time so time is of the essence and we need to get sold quickly. Thankfully, we have an accepted offer and are in escrow already.
Whatever equity is left after that payoff is what determines what you actually walk away with, not the home’s list price and not the number you remember from your original appraisal or loan amount. The balance you took out years ago has likely grown, sometimes by a lot, since interest and fees add up every single month, you’re not making a payment. You still have normal selling costs on top of that too, commissions, closing costs, any repairs the home might need to get market-ready. So before you even think about listing, the very first thing I ask my clients is to show me the most recent loan payment statement. It is very common that my clients get this paperwork and really never look at it and don’t realize how high the balance has grown.
I’ve had clients come to me thinking they had comfortable equity, and once we pulled the mortgage statement out, the number was much higher han what they had in their head. That changed our entire conversation about urgency and how much they will net.
PART 4 — The Family May Become Part of the Decision
A lot of the time, the homeowner isn’t the only one involved anymore. Family members helping out often don’t fully understand how the reverse mortgage works. I have clients that the husband had a stroke and they decided to move into assisted living facility. They needed to sell their home but because of the reverse mortgage there just wasn’t a lot of equity left to help with the move.
I meet with clients that are dealing with a the loss of a parent and are grieving while trying to figure out next steps and just learning that the mortgage is a reverse mortgage.
I worked with a family recently where the adult children came into town after their father passed away to get the home ready to sell. As we went through paperwork together, that’s when they discovered the reverse mortgage. Once we had the numbers in front of us, the conversation changed to “what does this actually leave us with.” They knew the father had taken out a loan years ago but they didn’t fully understand the reverse mortgage was adding to the balance / payoff each month. It wasn’t a disaster, but it was a moment of everyone recalibrating in real time.
I want to be clear; this isn’t me saying reverse mortgages are bad for families or situations. The lesson is simply that families do better when they understand the arrangement before a major transition, not in the middle of one. Get the documents organized, talk about the payoff amount early. Waiting too long only adds stress at a time when everyone’s already dealing with enough.
PART 5 — Questions to Answer Before Selling
So, if you or a family member has a reverse mortgage and you’re thinking about selling, here’s exactly what to nail down first.
Start with the current estimated value of the home, based on real comparable sales, not just a Zestimate. Talk to a real estate agent. Our market is currently slow right now so I am being conservative when I recommend a list price.
Get the current reverse mortgage balance from the most recent statement and if possible, call the lender and get the payoff amount straight from the lender. Estimate your selling expenses, commissions, closing costs, and any prep work the home needs. Then subtract both the payoff and those expenses from the value to see your actual remaining equity. Check whether there is any timing requirements tied to the loan itself.
The main takeaway here is simple: Be as informed as possible when considering this type of loan and make sure you keep an eye on the balance as it grows.
FINAL TAKEAWAY
So, is a reverse mortgage actually good for Las Vegas retirees?
For some homeowners, it may help them remain in their home and improve their financial flexibility now. For others, it may leave less equity available when they are ready to sell.
The important thing is to understand how it fits into the homeowner’s complete plan not only today, but also when the home eventually needs to be sold. If you currently have a reverse-mortgage, you should also request an updated payoff statement and speak with the appropriate reverse-mortgage or financial professional about your specific loan.
If you have a reverse mortgage and are considering selling your Las Vegas or Henderson home, I’d be happy to help you understand the real estate side of the decision and estimate what the property may sell for.
Subscribe for more Las Vegas retirement and real estate information, and I’ll see you in the next video. https://youtube.com/@lesliecarverlv?si=TArlMK8hxmLNboql