5 Things South Dakota Homeowners Should Know Before Getting a Reverse Mortgage

If you're 62 or older and own your home in South Dakota, you've probably heard the term "reverse mortgage”, maybe from a TV ad, a neighbor, or a family member who brought it up at Thanksgiving dinner.

What you've heard may have left you curious, skeptical, or somewhere in between. A reverse mortgage, formally called a Home Equity Conversion Mortgage, or HECM, is one of the most misunderstood financial tools available to retirees. After years of sitting across the table from South Dakota homeowners and walking them through exactly how this works, I want to share the five things I wish every client knew before our first conversation.

What Every South Dakota Homeowner 62+ Should Know About Reverse Mortgages

1. You Still Own Your Home; the Bank Does Not Take It

This is the number one fear I hear, and it's simply not true. When you take out a reverse mortgage, your name stays on the deed. You own your home. The lender places a lien on the property, the same as any other mortgage, but you remain the owner and can sell, move, or leave it to your heirs at any time.

The loan does not come due as long as you live in the home as your primary residence, pay your property taxes and insurance, and maintain the property. There is no point at which the bank shows up and says your time is up.

2. Your Heirs Won't Be Left With a Bill They Can't Pay

The second fear most often heard is about what happens to the kids. South Dakota families tend to be close-knit, and no one wants to leave their children or grandchildren with debt they can't handle.

Here's what happens: a reverse mortgage is a non-recourse loan. That means when the loan becomes due, when you move out, sell, or pass away, your heirs are never required to pay back more than the home is worth at that time. If the loan balance exceeds the home's value, FHA insurance covers the difference. Your family pays nothing above the appraised value.

Your heirs have three options when the loan comes due: sell the home and use the proceeds to pay off the loan (keeping any remaining equity), keep the home by purchasing it at 95% of the appraised value, or walk away with no personal liability if the home is worth less than the balance owed.

Read our full guide to reverse mortgage myths South Dakota families believe.

3. No Monthly Mortgage Payment Is Required, But You Still Have Responsibilities

This is the part that genuinely surprises people. A reverse mortgage eliminates your monthly principal and interest payment. For many South Dakota homeowners on a fixed income, that one change can meaningfully reshape their retirement budget.

You still have three ongoing responsibilities: pay your property taxes, maintain your homeowner's insurance, and keep the home in reasonable condition. If you fall behind on taxes or insurance, the loan can be called due. These aren't optional, and a good reverse mortgage specialist will make sure you understand them clearly before you sign anything.

Many of my clients choose to set aside a portion of their reverse mortgage proceeds specifically to cover taxes and insurance going forward. If a financial assessment determines you're at risk of not keeping up with these costs, a Life Expectancy Set Aside (LESA) may be required, essentially an escrow account built into the loan.

4. The Money Can Come to You in Several Ways; Choose What Fits Your Life

Most people assume a reverse mortgage means getting a lump sum of cash. That's one option, but it's not the only one, and for many South Dakota homeowners, it's not the best one.

The proceeds from a HECM can be structured as a lump sum, a monthly payment to supplement your income, a line of credit that grows over time at the loan's interest rate, or any combination of these. The line of credit option, in particular, is something financial planners increasingly recommend for clients who don't need the cash immediately. It grows automatically and can be tapped later for healthcare costs, home modifications, or unexpected expenses.

Which structure makes sense for you depends entirely on your retirement picture, your income sources, your expenses, your health situation, and your goals. This is the kind of conversation we have with every client before we discuss applications or paperwork.

Learn more about how much money you could get from a reverse mortgage in South Dakota.

5. HUD Counseling Is Required, And That's a Good Thing

Before you can close on a reverse mortgage, federal law requires that you complete a counseling session with a HUD-approved agency. This is not optional, and it's not a formality. It's a genuine, independent education session designed to ensure you fully understand what you're getting into.

The counselor will walk you through how the loan works, your obligations, alternatives that might exist, and the long-term implications for you and your estate. The session typically takes about an hour and can be done by phone. The cost is minimal and in some cases can be waived.

Fairway Heartland will connect you with a HUD-approved counselor as part of the process. Think of this as a feature, not a hurdle. A client who enters into a reverse mortgage with a full understanding will be satisfied with their decision for years to come.

Is a Reverse Mortgage Right for You?

A reverse mortgage isn't the right tool for everyone, but for the right South Dakota homeowner, it can be genuinely life-changing. Whether you're looking to eliminate a mortgage payment, cover healthcare costs, delay drawing from your IRA, or simply give yourself more flexibility in retirement, a HECM loan deserves a serious look.

The best way to find out if it fits your situation is to have a straightforward conversation. I'll ask about your goals, walk you through your options, and give you a clear picture of what a reverse mortgage would actually look like for your home and your life.

Explore everything about Jeff’s reverse mortgage services.

Ready to explore your options? Schedule a free appointment with Jeff.

Jeff Buum, NMLS #400290. Fairway Independent Mortgage Corporation NMLS #2289. Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. The youngest borrower must be at least 62 years old. Monthly reverse mortgage advances may affect eligibility for some other programs. These materials are not from HUD or FHA and were not approved by HUD or a government agency. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Licensed in South Dakota. Equal Housing Opportunity.