Alternatives To a Reverse Mortgage for Homeowners
Last updated 10/02/2023 byHeather Skyler
Compare Reverse Mortgage Companies
Home equity line of credit (HELOC)
- You don’t need to have as much equity as you do for a reverse mortgage.
- You only pay interest on the cash you end up withdrawing and using.
- There is typically an annual account maintenance fee, but it’s pretty minimal.
- Retirees on a limited income may not qualify for a HELOC.
- Unlike a reverse mortgage, you will have to make a monthly payment on a HELOC.
- You risk losing your home if you can’t pay back the loan.
- According to Er, you get the best rate since it will be on a conventional mortgage.
- The money can be used for anything you want.
- You don’t have to pay taxes on the cash you take out.
- You can still write off interest payments.
- You lose equity in the home.
- You could end up underwater.
- The more you borrow, the more interest you end up paying, which can add up in the long run.
- You will have to make monthly loan payments, possibly a higher amount than you’ve been paying.
Sell the home and buy something smaller – or just rent
- You could end up with a large amount of cash leftover, which you can use any way you choose.
- You can simplify your life by living in a smaller home or renting.
- There is no loan to worry about paying back.
- In some states, there will be a one-time tax advantage, as Er explains above.
- You may have a sentimental attachment to your home.
- Not every state will offer a tax advantage, so your property tax may rise.
- Your home may not be worth enough for you to buy or rent another home to your liking.
Alternatives to a reverse mortgage | Start your research
Heather Skyler writes about business, finance, family life and more. Her work has appeared in numerous publications, including the New York Times, Newsweek, Catapult, The Rumpus, BizFluent, Career Trend and more. She lives in Athens, Georgia with her husband, son, and daughter.
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