Evaluating Reverse Mortgages vs. Selling Property Outright vs. Second Mortgages

Reverse Mortgage vs. Selling Property Outright vs. Getting a Second Mortgage

When it comes to making the decision of how to best use the equity in your home, there are a few options available – reverse mortgage, selling property outright, or getting a second mortgage. All have their own set of pros and cons that need to be considered before making a decision.

Reverse Mortgage

A reverse mortgage is a loan that allows homeowners 62 years or older to tap into their home equity without having to make monthly payments. The loan is repaid when the borrower dies, sells the home, or moves out of the home.


• No monthly payments are required, which can free up income for other purposes.

• The loan does not have to be repaid until the borrower dies, sells the home, or moves out, so it can provide a source of income in retirement.

• Reverse mortgages can be used to pay off an existing mortgage, providing relief from monthly mortgage payments.


• The interest on the loan accrues over time, which can decrease the amount of equity you have in your home.

• If you move or sell your home before the loan is repaid, you may owe more than the value of your home.

• Reverse mortgages can be expensive, with origination fees, closing costs, and servicing fees.

Selling Property Outright

Selling your property outright is another option to consider when it comes to tapping into your home equity.


• Once the property is sold, you will have a lump sum of cash that can be used for any purpose.

• You will no longer have a mortgage or any other monthly payments associated with the property.

• You will be able to downsize to a smaller home or move to a different location if desired.


• You will no longer own the property and will not have any equity in it.

• If you sell the property for less than you owe on the mortgage, you will still be responsible for paying off the difference.

• You may have to pay capital gains taxes on any profit you make from the sale of the property.

Getting a Second Mortgage

Getting a second mortgage is another way to access the equity in your home without having to sell it outright.


• You can get a second mortgage for a fixed interest rate, which can provide stability.

• You can choose to make monthly payments or defer them until the loan is due.

• The interest you pay on the loan may be tax-deductible.


• If you default on the loan, you could lose your home.

• The interest rate on a second mortgage is usually higher than the rate on your first mortgage.

• You will have two mortgages to pay each month, which could be a strain on your budget.

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