Getting a reverse mortgage was one of five methods of getting retirement income from the home listed in a recent U.S. News: Money article, along with tapping into home equity.
“[G]enerating enough retirement income has become a herculean task,” the article says. “Your home may just be the answer. If you have a home with some equity, you may be able to use it to boost your retirement income.”
There are pros and cons to getting a reverse mortgage, which are sometimes used as a last resort but are a lower-risk way to tap into home equity compared to other forms of borrowing against the home, says U.S. News.
“Reverse-mortgage scandals abound, so you need to be careful who you deal with when taking one out,” the article cautions. “Also, the fees associated with a reverse mortgage can be onerous.”
Homeowners with “plenty of equity” in their homes have other several options including a home equity loan, a home equity line of credit, or a cash-out refinance.
“Today’s low mortgage rates make these attractive options,” writes U.S. News. “Each of these options will have different costs and benefits, so think carefully about what you plan to do with the money and whether tapping your home’s equity will be worth your while in the long run.”
Other ways to tap the home for retirement income include selling and downsizing; renting out the home during extended travels; and getting a live-in renter to capitalize on empty bedrooms.
Written by Alyssa Gerace