Using a Reverse Mortgage in Retirement

As my readership grows right in front of my very eyes, I am asked to cover different topics that are not exactly mainstream.  While this post makes mention of reverse mortgages, I do not promote or suggest using this type of financing to anyone.  I do think it’s important to become more knowledgeable about what is available to you as you approach a traditional retirement age and understand the best way to handle your money.  Like everything in life make sure to do your own research and make a decision that works best for you.


Are you of retirement age or close to it? Have you thought about what a reverse mortgage can do for you? Sure, retirement can be a good thing and something one looks forward to, but it also means living on a fixed income. That can be both a good thing and a bad thing. If you are looking to augment that income and you are a homeowner, you do have options.


If you have managed to buy a property or two during your working life, you might have turned one or more of them into rental properties. If this is the case, you might actually be able to retire a bit early because of the income you will be getting from them. This will take a bit of planning, though. You will also need to be sure that you have already saved up enough to be comfortable on.


Some people are actually finding that they are able to retire by flipping houses. There are TV shows galore that show you just how to do it too. Many people are making big bucks this way. However, this is also quite risky. First, you need to find a home and buy it. Then you will need to sink a lot of cash into fixing it up and then you have to hope that you will be able to sell it for a profit. Those who can do this consistently can turn a big profit. The trick is in being able to be consistent with it. This option should really be thought about long and hard before you jump into it.

Reverse Mortgage

Once you have exhausted those options, you might consider a reverse mortgage as a strategy for retirement. You have to be at least 62 years old and you have to both own and live in the home that you get the reverse mortgage for. If you don’t meet these first two requirements, you can forget about it.

Reverse mortgages are really made for people over the age of 62 who have managed to build up quite a bit of equity in their homes. This is ideal for those who don’t plan on selling their house and who want to stay there until forever.

What Exactly is It?

People who get a reverse mortgage essentially borrow money using the equity in their home as collateral. They need to either completely own the home and have no mortgage on it, or have a small mortgage that can and must be paid off with the reverse mortgage.

The thing is, you don’t pay the money back each month as a mortgage payment. Instead, the bank will pay you and the loan isn’t to be paid back until either the borrower dies or the home is sold.

The money can be received as a lump sum, a line of credit, or a monthly payment. The amount that is able to be borrowed will depend on the equity you have in the home, your age, how long the loan is for, and whatever the current interest rates are.

Pros and Cons

Just as with everything else, there are pros and cons. Some of the pros are:

  • Being able to turn the equity in your home into money while still retaining ownership and possession.
  • No need for a job, good credit or steady income for approval.

Some of the drawbacks are things like:

  • High fees that can include origination fees, closing costs, mortgage insurance, and service fees.
  • If you die, heirs have to sell the home to repay the loan.
  • If you have to move to a long term care facility, the home will need to be sold to repay the debt.

You can see, when it comes to real estate and retirement, you have options…and can even opt for a reverse mortgage if you own a home.

3 Responses to “Using a Reverse Mortgage in Retirement

  • I guess as a last resort for seniors in a pinch this is a viable option. IT does however come with higher fees compared to other loan options. I sure wish they never get rid of Social security.
    EL @ MoneyWatch101 recently posted…What is the Secret to Becoming Rich?My Profile

    • EvenStevenMoney
      1 year ago

      It certainly wouldn’t be the first option that I would consider. If I had the house paid off I’d have to ask myself if it made more sense to sell the house outright and find other housing. If I only had a portion paid off, could this be a good use of the money especially if I don’t have much coming in like only a social security check. I would think that it would be better for individuals as well that don’t plan on gifting the house to family, I think this would just be the start of the questions and research for me.

  • I think it is important to be prepared for retirement and all that may come with getting older. Whether you are able to stay in your home long term, move to a retirement village, or assisted living – it is important to be knowledgeable about all of your options. Great information on some of the financial things that people should think about. Thanks for sharing!

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