Selling Your Home Outright vs. Getting a Reverse Mortgage: What to Consider
When it comes time to retire, many homeowners are faced with the decision of whether to sell their home outright or to get a reverse mortgage. There are a few things to consider when making this decision, and the following information will help you understand the pros and cons of each option.
Selling Your Home Outright
If you sell your home outright, you will have the ability to pocket the entire proceeds from the sale. This can be a great way to generate a lump sum of cash that can be used for any number of purposes, including travel, medical expenses, or simply to supplement your income during retirement.
However, there are a few things to keep in mind if you choose to sell your home. First, you will need to find a buyer who is willing to pay your asking price. This can sometimes be difficult, especially in a down housing market. Additionally, you will be responsible for paying any outstanding mortgage balance, as well as any real estate commissions and closing costs.
Getting a Reverse Mortgage
A reverse mortgage is a loan that allows you to tap into the equity in your home without having to sell it. The loan is repaid when the house is sold, either when you die or when you move out of the home permanently.
One of the biggest advantages of a reverse mortgage is that you can stay in your home as long as you like. You also won’t have to make any monthly loan payments, which can free up some much-needed cash during retirement.
However, there are a few potential drawbacks to consider before getting a reverse mortgage. First, the loan balance will increase over time, eating into your home equity. Additionally, if you plan on leaving your home to your children, they may have to pay off the loan balance when they sell the house.
Which Option is Right for You?
The decision of whether to sell your home outright or to get a reverse mortgage is a personal one that depends on your unique circumstances. It’s important to carefully consider all of your options before making a decision.
If you need some help deciding what to do, you can speak with a financial advisor or housing counselor. They can help you understand your options and make a decision that’s right for you.