Taking out a reverse mortgage is a serious decision. To ensure that you have made a sound choice, make a side-by-side comparison of the reverse mortgage case and its alternatives. Below are five alternatives that may achieve your financial objectives without the expense of a reverse mortgage.

Selling the House

Replacing your home with something smaller may be a sensible option. After taking into account the cost of new housing and selling your old house (traditional commissions to real estate agents are a hefty 6%), the sale of your home may yield enough to solve your cash flow issues.

Renting the House

If you have somewhere else you can live, such as with family or friends, you could improve your cash flow by renting your home while retaining the valuable tax benefits of being a landlord. Check with your accountant or tax preparer for your situation.

Taking in a Boarder

If you have an extra room in your house, you could rent the room for extra money. Not only might you improve your cash flow, but you might also help someone in search of reasonably priced housing. Choose your roommate carefully–advertise and interview candidates before deciding.

Traditional Mortgage or Home Equity Line of Credit

If you have verifiable income and good credit, you may be approved for a traditional mortgage, which would have to be repaid on a monthly schedule. A home equity line of credit might be more appropriate if you want to access cash for emergencies.

Public Assistance

Don’t be ashamed to look into government help. If you’ve worked, you’ve probably paid into a public assistance program. Supplemental Security Income (SSI) is available to eligible individuals, which includes those who are over the age of 65 and meet other requirements. AARP offers a resource center to learn more about public benefits.

A reverse mortgage may be the best solution if your income or credit precludes you from tapping your home equity with a traditional mortgage, if you don’t want to sell your property, or are uncomfortable with someone else living in your home. Reverse mortgages allow seniors to remain in their homes and the fees are almost always less than real estate commissions. Reverse mortgage counseling can help you learn about these loans and decide if they are right for you. Find a reverse mortgage counselor on HUD’s Website and make an informed decision.

Renee Morgan
Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.