Is a Reverse Mortgage Right for South Dakota Homeowners?
By Jeff Buum, Certified Reverse Mortgage Specialist (CRMS) | Fairway Heartland | Sioux Falls, SD | NMLS #400290
jeffbuummortgage.com · 8 min read · Reverse Mortgage
The most important conversation about a reverse mortgage is not about rates, fees, or loan amounts. It is about whether a reverse mortgage is actually the right tool for a homeowner's situation. The answer is not always yes.
A reverse mortgage is a powerful retirement planning tool, but like any tool, it works best in the right hands for the right job. In his years as a Certified Reverse Mortgage Specialist at Fairway Heartland in Sioux Falls, Jeff Buum has helped many South Dakota homeowners discover that a HECM is exactly what they needed, and has also told families honestly when it wasn't the right fit. This article offers that same honest assessment.
Who Is a Reverse Mortgage Designed For?
A Home Equity Conversion Mortgage (HECM) is designed for homeowners who are 62 or older, have significant equity in their home, and plan to continue living there as their primary residence. But meeting the technical eligibility requirements doesn't automatically make a reverse mortgage the right decision. In Jeff Buum's experience, a reverse mortgage tends to be a strong fit when one or more of the following is true:
You're carrying a mortgage payment you'd like to eliminate: one of the most immediate, concrete benefits is eliminating a monthly principal and interest payment. For South Dakota homeowners on a fixed retirement income, this one change can meaningfully reduce financial stress.
You want to stay in your home but need cash flow: if you love your home and aren't ready to sell but need more monthly income than Social Security or a pension provides, a reverse mortgage can create monthly payments or a line of credit without requiring you to move.
You have significant home equity but limited liquid assets: many South Dakota homeowners are "house-rich, cash-poor", their largest asset is locked in their home. A reverse mortgage is the mechanism for unlocking that asset without selling it.
You want to delay Social Security for a larger benefit: drawing from a reverse mortgage line of credit from age 62 to 70 can let you delay claiming Social Security, which increases the lifetime benefit by roughly 8% per year. For healthy South Dakotans expecting a long life, this can be financially significant.
You want to buy a new home without a monthly payment: the HECM for Purchase program lets you buy a new home with a down payment and no monthly mortgage payment, a strong option for downsizing or moving closer to family.
You need to fund long-term care or healthcare costs: proceeds can pay for in-home care, assisted living, or long-term care insurance premiums, helping you stay in your South Dakota home longer and protect other retirement assets.
When a Reverse Mortgage May Not Be the Right Fit
Honesty matters more than making a sale. These are situations where Jeff Buum typically advises South Dakota homeowners to consider other options first:
You plan to move in the near future. If you're considering a smaller home, a senior community, or a move closer to family within the next few years, the upfront costs may not have enough time to provide value.
You have limited equity. If you owe close to what your home is worth, there may not be enough equity to make a reverse mortgage worthwhile after paying off the existing loan.
You want to leave the home to heirs with maximum equity. A reverse mortgage balance grows over time, which reduces the equity heirs inherit. If passing your home to family with minimal debt is your top priority, a reverse mortgage may conflict with that goal.
You're struggling to pay taxes and insurance consistently. A reverse mortgage does not eliminate property tax and insurance obligations. If consistent payment is difficult, a reverse mortgage may trigger a default, and a Life Expectancy Set Aside (LESA) may be required.
You haven't explored all the alternatives. Before deciding, it's worth understanding the full range of options, downsizing, a HELOC (if you qualify), or restructuring retirement income. A reverse mortgage should be a considered decision, not a default one.
The Right Questions to Ask Yourself
When South Dakota homeowners are unsure whether a reverse mortgage is right for them, Jeff Buum walks them through a series of honest questions. These are the ones that matter most:
Do I plan to stay in my home for at least five years or more?
Can I consistently pay my property taxes, insurance, and home maintenance costs?
Is eliminating my mortgage payment, generating cash flow, or accessing equity a meaningful retirement need, not just a want?
Have I discussed this with my financial advisor, CPA, or estate attorney, or am I making this decision in isolation?
Do I understand how a growing loan balance affects the equity available to my heirs?
If the honest answers suggest a reverse mortgage fits, the next step is a conversation, not an application. Jeff Buum runs the numbers for a homeowner's specific home, age, and goals so they can see exactly what a HECM would look like for them.
Frequently Asked Questions
Is a reverse mortgage a good idea?
It depends. It tends to fit homeowners who want to age in place, could use additional retirement income, and understand that it is a loan with an accruing balance. It tends not to fit those planning to move soon or prioritizing maximum inheritance.
What are the ongoing responsibilities?
The borrower must live in the home as their primary residence and keep current on property taxes, homeowners insurance, and maintenance. There is no monthly mortgage payment.
Will a reverse mortgage use up all my equity?
The balance grows over time, which reduces equity, but a non-recourse structure means you and your heirs never owe more than the home's value at sale.
Let's find out together at no cost and no commitment.
Jeff Buum · (605) 321-7303 · jeff.buum@fairwaymc.com · jeffbuummortgage.com/reverse-mortgage
Copyright©2026 Fairway Independent Mortgage Corporation (“Fairway”) NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-866-912-4800. All rights reserved. Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency. 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. 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. Equal Housing Opportunity.
