Reverse mortgages can be a good option for many homeowners. They let you borrow based on the equity in your home. Instead of paying the bank, the bank pays you — tax-free — with a series of payments via a partial lump sum of money or a line of credit.
Under the right circumstances, a reverse mortgage loan might help an elderly person stay at home when retirement money is running out.
Money Talks News founder Stacy Johnson says reverse mortgages can make sense for certain types of people. But they also come with some big disadvantages. For more on the pros and cons of reverse mortgages, check out “Should I Get a Reverse Mortgage?”
If you read that story and decide a reverse mortgage is not for you, it’s probably time to look at other options. If you prefer taking another route, check these alternatives.
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1. Sell and downsize
It’s hard to let go of your home, but selling may give you more freedom.
- If you have equity in the home, you’ll probably get more of it from selling than from taking out a reverse mortgage.
- You can use the proceeds from the sale to buy or rent a more affordable home, or to move in with relatives.
- The home is no longer yours.
- You can’t bequeath it to heirs.
Mortgage rates have climbed recently, but are still low by historical standards. If your rate is high now, look into refinancing, which might drop your monthly payment to a more manageable number.
- Fees are typically lower than with a reverse mortgage.
- Your heirs still may be able to inherit the property.
- You must