Contrasting Selling Property Outright vs. Reverse Mortgages vs. HELOCs

3 Mortgage Options for retirees: Sell property outright, get a reverse mortgage, or get a HELOC

As people enter into retirement, they often consider selling their property outright, taking out a reverse mortgage, or getting a home equity line of credit (HELOC). Here are some things to consider for each option:

Selling property outright:

-With this option, you will have a lump sum of cash that you can use however you want.

-You will no longer have a monthly mortgage payment.

-You may need to downsize or move to a different location if you want to buy a smaller home or condo.

-You will need to find somewhere else to live if you plan to rent.

Reverse mortgage:

-With a reverse mortgage, you can stay in your home and don’t have to make any monthly payments.

-The interest on the loan accumulates over time and is due when the loan is repaid, either when the last borrower leaves the home or dies.

-The loan amount can impact your eligibility for Medicaid.

-Your heirs may have to sell the home to repay the loan if the loan balance is more than the value of the home when you die.

Home equity line of credit (HELOC):

-A HELOC allows you to borrow against the equity in your home and typically has a lower interest rate than other types of loans.

-You will need to make monthly payments on the loan.

-The loan term is usually shorter than a mortgage, so the loan will need to be paid off sooner.

-You may be able to access the equity in your home without having to sell it.

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