Some retirees are choosing to never sell their home — and the reason is both logical and grim
For many retirees, selling the family home makes a lot of sense. They don’t need three or four bedrooms anymore, or they don’t want the hassle of maintaining a large property. Maybe stairs have become impractical. OR maybe they want to relocate in their golden years. After all, empty-nest baby boomers own 28% of the nation’s large homes, according to a report from Redfin. But there’s another reason selling might make sense: Many retirees are counting on their home equity to provide financial security in retirement. Related video: Boomers hold $13.8 trillion in home equity and many are picking the wrong way to pass it on (Money Talks News) Yet, some retirees may choose never to sell, thanks to a little-known Medicare rule. Other retirees may have never heard of it, so they end up with an unexpected bill — only after they’ve sold their home and moved on with life. Elizabeth Gavino, principal of financial and retirement planning firm Lewin & Gavino, told Fortune that more clients are “getting blindsided” by this issue. “And it’s getting worse.” It’s called IRMAA. Here’s what you need to know. How does IRMAA impact your Medicare premiums? Most Americans know that when you turn 65, you qualify for Medicare. But you may not be aware Medicare comes with a premium surcharge called the income-related monthly adjustment amount (IRMAA) — sometimes referred to as the “Medicare surcharge.” Here’s how it works: If you make a lot of money one year, your Medicare Part B (for doctor visits and outpatient services) and Part D premiums (for prescription drug coverage) will jump — two years later. That’s because Medicare bases IRMAA on the modified adjusted gross income (MAGI) that you reported on your tax return two years ago. Surcharges start at $109,000 for individuals and $218,000 for joint filers in 2026. Being pushed into a higher income tier could mean paying hundreds more each month. For example, in 2026, the standard Part B premium costs $202.90 per month. But if you trigger the surcharge, it can range from $284 to $690 a month. While Part D prescription drug plans are provided by private health insurance companies — and vary widely — your IRMAA charge will be added to your monthly premium costs. Selling your home is one way to push yourself into a much higher income tier — even if it’s a one-time income boost. Home values have increased on average 4.5% per year since 2001, according to Zillow’s Home Value Index. When your home increases in value, you build equity. Depending on the state of the housing market in your region, you could profit from that equity when you sell. You can also borrow against your home equity, too. While the housing market is cooling in some parts of the country, that’s not the case everywhere. And where home prices continue to rise, retirees may feel trapped. Gavino told Fortune that a couple in coastal California who bought their home in the early ’90s could potentially see $800,000 to $1.5 million in home appreciation, resulting in $1 million in taxable gains. What to know before you sell The first step is actually knowing that IRMAA exists — so you don’t get a shockingly high Medicare bill two years after selling your home. There are other ways to trigger IRMAA, too. While selling real estate is a big one, any transaction that generates significant income can trigger IRMAA, such as taking distributions from retirement accounts, converting funds in an IRA to a Roth IRA or selling stocks that have appreciated in value. Before making any moves, it could be worth talking to a financial advisor or a tax professional — maybe both. When it comes to selling your home, the easiest way to avoid IRMAA is to avoid triggering it in the first place. That can be done by selling your home before you turn 63 (to avoid the two-year lookback window). Or, you can choose to age in place in your current home, which more retirees are doing these days. Research from Clever Offers found that 61% of boomer homeowners intend to live in their current home for the rest of their lives. But that’s not realistic for everyone. The same research found that half of boomer homeowners (49%) are worried that changes to Social Security or Medicare could force them to sell their home. Add a Medicare surcharge on top of that, and it’s a double-whammy. Even if they have a lot of equity in their home, there may be other reasons not to sell. Buying a smaller home could still potentially eat into their profits, once they take into account the higher price tag of today’s homes, higher property taxes and high moving expenses. If a retiree chooses to sell (or is forced to sell), a capital gains exclusion for the sale of a primary home could help: up to $250,000 for an individual or $500,000 for a married couple filing jointly. This could help keep your MAGI below the thresholds that trigger IRMAA for Medicare premiums. Another option is to view the Medicare surcharge as a one-time cost — which, perhaps, you could deduct from the profits made during the sale of your home. It means you’ll have a year of higher premiums, but it’s not permanent. When your high-income year falls off the two-year lookback window, your premiums will drop too. Story by Vawn Himmelsbach
NRMLA’s president says record senior home equity represents untapped retirement relief for millions of older homeowners
One of the biggest mortgage stories of the year is how borrowers are turning to home equity products to tap into record amounts of equity. With mortgage rates reaching 11-month highs this week, the demand for equity access is likely to continue to grow. This trend extends to home equity for older homeowners. Senior home equity in the United States climbed to a record $14.92 trillion in Q1 2026, according to the latest NRMLA/RiskSpan Reverse Mortgage Market Index, driven by an estimated $314.8 billion increase in senior home values. While these borrowers often turn to home equity lines of credit (HELOC) to tap into that equity, qualification can be difficult for homeowners on fixed budgets. However, reverse mortgages offer a different pathway for these borrowers who cannot qualify for a HELOC. The gap between the equity older homeowners have accumulated and the options available to access it is where the opportunity for brokers lies, and according to the president of the National Reverse Mortgage Lenders Association (NRMLA), that gap is widening. Steve Irwin (pictured top), president of NRMLA, said the equity figure reflects decades of disciplined homeownership converging with an urgent need for retirement financial relief. “Older homeowners have worked diligently to establish themselves in a home, and as a part of that, they have built out this tremendous amount of equity,” Irwin told Mortgage Professional America. “And at the same time, there are challenges as far as retirees go and their finances and their ability to effectively age in place. “People are concerned about shortfalls in their retirement financial plan and their ability to mitigate longevity risk and to absorb any unexpected shocks, whether it be home repairs, home modifications, or unexpected medical bills.” Helping borrowers with retirement anxiety Irwin said the reverse mortgage market has been responding directly to the specific costs squeezing fixed-income homeowners, from insurance premiums rising at alarming rates in certain markets to home repair costs and broader inflation. “We have seen people monetize some of their home equity to help pay for that insurance,” he said. “We’ve also seen a lot of borrowers who have used these products to pay off their traditional mortgage and therefore relieve themselves of that monthly principal and interest payment.” Reverse mortgages may be the only path for some older homeowners looking to tap into their equity. Irwin said nearly 40% of HELOC applicants over 65 years old are being rejected, pointing to a large population of older homeowners who want to access their equity through traditional channels and cannot. “People are looking to monetize that equity,” he said. “And the alternative for those people may be, in the right circumstances, for the right people, a reverse mortgage product.” Irwin said retirees are also using reverse mortgages in a way that would have been less obvious five years ago. In a market where investment portfolios can drop suddenly, having access to a reverse mortgage line of credit allows them to avoid selling assets at a loss during a downturn. “We see an ever increasingly popular utilization of the reverse mortgage products to create a standby line of credit to access in times when the markets may be down, when there are unexpected expenses that arise,” he said. “It is certainly a product that is playing a more and more important role in an older homeowner’s financial plan.” A growing demographic Irwin said one of the more surprising trends in reverse mortgage inquiries is who is initiating them, and it is not always the older homeowner. “We’re seeing a lot of inquiries from children of older homeowners,” he said. “Those children understand that monetizing the equity in their home would provide them some relief too. We’re seeing more and more adults, children of homeowners, referring their parents to these products.” The demographic tailwind is substantial and accelerating, Irwin said. According to AARP, 10,000 people turn 65 every day in the United States, and retirement financial anxiety is not diminishing. “As our country continues to age and with the uncertainty around people’s retirement finances, this is absolutely an option and a loan product that should be carefully considered,” he said. “We encourage trusted advisors, financial planners, CPAs, attorneys, real estate agents, all to continue to get educated on the relief that these products may provide under the right circumstances, for the right people.” By Matt Sexton
Relying on Home Equity for Retirement? You Could Be Facing a Shortfall
Homeowners 62 and older are sitting on more housing wealth than ever. Senior home equity climbed to a record $14.66 trillion in the third quarter of 2025, up almost 2% from the previous quarter, according to the NRMLA/RiskSpan Reverse Mortgage Market Index. Median home equity for homeowners 65 and older was $250,000 in 2022, up 47% from $170,000 just three years earlier, according to Harvard’s Joint Center for Housing Studies. Many retirees see their homes as a safety net, the asset that will eventually cover a move, a health scare, or a stretch where Social Security and savings come up short. But this can be a significant financial mistake, as that safety net may be much smaller than it looks. Older homeowners tend to sell for less than younger ones selling a similar home. Therefore, the equity they think they have, often based on a standard market valuation, may actually be thousands of dollars less than they were anticipating. Why homeowners over 70 often sell for less than expected A seller in their 80s typically gets about 5% less than someone in their 40s or 50s for a comparable home, according to a January 2026 research brief from the Center for Retirement Research at Boston College. On a $429,300 home, the current median sale price nationally, according to the National Association of Realtors, that’s a loss of about $21,465. The researchers found that older sellers’ homes tend to have more deferred maintenance, things like an aging roof, an outdated kitchen, or decades-old wiring and plumbing that a younger seller might have already replaced. Buyers price all of that into their offer before they even make one. Plus, older sellers are more likely to sell off-market, often directly to an investor, instead of listing publicly where competing buyers can push the price up. A private sale to a single buyer means no competing bids and no upward pressure on price. Lower-than-expected home equity can be problematic for downsizing and care plans A lower sale price is particularly difficult for retirees who are counting on that money to fund a specific next step, such as a smaller home, an assisted living move, or long-term care. If we take our example above, where the shortfall is over $21,000, that’s a big chunk missing from the equity you were expecting. Assisted living now costs a median of $6,200 a month nationally, or about $74,400 a year, according to CareScout’s 2025 Cost of Care Survey. A retiree who comes up short on the home sale may end up having to choose a smaller apartment, a second- or third-choice assisted living facility, a less convenient location, or ask family to help cover the gap in the first year or two. Housing costs don’t disappear just because you’ve retired Selling for less is only part of the picture. Many retirees are still paying for their homes well into retirement. The share of homeowners ages 65 to 79 carrying a mortgage rose from 24% in 1989 to 41% in 2022, and median mortgage debt over that period jumped from $21,000 to $110,000, according to Harvard’s Joint Center for Housing Studies. For these retirees, a chunk of any sale proceeds goes straight toward paying off what’s owed before it can fund anything else, so getting less than you expected on the sale of your home can have an even bigger impact. Even with home equity, many retirees still face a gap Home equity alone doesn’t close the broader retirement savings gap either. The typical baby boomer faces an annual spending shortfall of about $9,000, or roughly 24% of what they’ll need, even after their other assets are factored in, according to Vanguard’s 2025 Retirement Outlook. Tapping home equity can help close that gap. Vanguard’s researchers estimate that if boomers sold their homes outright and invested the proceeds, the share who are financially on track for retirement would rise from 40% to 60%. For most retirees, selling outright and becoming a renter isn’t realistic, though. Therefore, they downsize or move to assisted living, all of which reduces how much actual liquid equity they receive from the sale of their property, so it may not fully close the $9,000 per year gap. How to protect more of your home’s value before you sell A few practical steps can help retirees hold onto more of their home’s value when the time comes to sell. Tackling small repairs before listing, fresh paint, a working appliance or two, and basic curb appeal improvements can offset some of the deferred-maintenance discount and reduce lowball offers. Listing on the open market rather than accepting the first private offer also matters, even when the public listing process feels slower than a quick investor sale. A HELOC or reverse mortgage could provide a way to access equity gradually rather than relying entirely on a future sale. And any cash offer, especially from an investor, is worth a second opinion before accepting it for speed alone. Bottom line Only 9% of baby boomer homeowners say they plan to use home equity or a reverse mortgage to fund retirement, according to Freddie Mac’s 2024 Baby Boomer Consumer Research survey. Most are counting on savings, Social Security, and pensions instead. Home equity is real wealth, and for most retirees, it’s one of the largest assets they have. But it’s also illiquid and tied to market conditions, and the amount a retiree actually clears from a sale can come in lower than planned. The smart move for seniors is to treat home equity as a cushion, not a paycheck. Chris Lewis, CEPF
7 myths about reverse mortgages that seniors still believe
7 myths about reverse mortgages that seniors still believe Reverse mortgages have been misunderstood for forty years and show no sign of being understood better anytime soon. Oftentimes, this type of mortgage gets dismissed before it gets examined or is casually mentioned at dinner tables and equated to a “scam” and/or a “trap” by people who read something once and never went back to check whether it was accurate. Some of the fear may be reasonable but some of it is just wrong. The myths below keep showing up and deserve a direct answer. Seven of them, below. Myth 1: The bank takes ownership of your home This is the most persistent and misleading myth. The CFPB states plainly that when you take out a reverse mortgage, the title stays in your name. The lender holds a lien, exactly as with a conventional mortgage, but ownership does not transfer. You remain on the deed and you can still sell or refinance. Conflating a lien with ownership has kept an enormous number of people away from a product that might have genuinely helped them. Myth 2: Your heirs will be stuck with the debt This one is verifiable in reality, yet somehow lands in the wrong conclusion. The CFPB explains that reverse mortgages are non-recourse loans, which means that your heirs can never owe more than the home is worth at repayment. If the loan balance exceeds the appraised value, FHA insurance absorbs the difference. Nobody comes after savings, investments or other assets. Myth 3: The money you receive is taxable income It isn’t. The IRS says it in a very straightforward manner: reverse mortgage payments are loan proceeds, not income. You borrowed against your equity and you were not paid. The proceeds will not push you into a higher tax bracket or affect Social Security or Medicare eligibility on their own. It may be worth discussing it with a tax advisor, but the money arriving in your account is not something the IRS counts as income. Myth 4: You can be forced out of your home The HUD says that HECM borrowers may remain in their homes indefinitely as long as they keep up with property taxes, homeowner’s insurance and basic maintenance. The lender cannot call the loan early because the housing market shifted or because you had a difficult financial year. The “being-forced-out” scenario people describe is usually whatever happens when someone stops paying taxes or insurance. That would put any homeowner at risk, reverse mortgage or not. Myth 5: Only desperate people get reverse mortgages Be mindful that a status myth is financially damaging. Bankrate notes that financial planners increasingly recommend reverse mortgages as a strategic retirement income tool, a way to manage sequence-of-returns risk, delay Social Security, or build a growing line of credit. The product was redesigned after 2013 with significantly stronger consumer protections. Using home equity strategically in retirement is not like acting out of desperation; it is actual planning. Myth 6: The lender can change the terms after you sign No. The terms of a Home Equity Conversion Mortgage are set at closing. The CFPB’s guidance states that the loan comes due when you move, sell or die, not when the lender decides it would be convenient. Mandatory independent counseling from a HUD-approved counselor is required before any HECM closes. The lender cannot unilaterally alter the deal afterward. Myth 7: A reverse mortgage will consume all your equity How much equity remains depends on how long the borrower stays in the home, the applicable interest rate and how much is drawn. Bankrate’s breakdown shows that borrowers who draw modest amounts early often leave significant equity behind, which eventually leads to the loan balance growing over time. The non-recourse protection exists because the math is unpredictable, so if it goes badly, the loss stops at the property value and reaches nothing else. The bottom line A reverse mortgage is not right for everyone; most importantly, families are not having a conversation based on those real concerns. They are working from myths that circulate because they sound plausible and nobody looks them up. These seven are worth looking up. The moral of the story is that facts are considerably less frightening than the rumors. The facts come from Bankrate, the Consumer Financial Protection Bureau, the IRS, HUD and AARP. Ricardo Ramirez
How a 67-Year-Old Used a Reverse Mortgage as a Bridge to Delay Social Security to 70 and Added $186,000 to Lifetime Income
A 67-year-old widow with a paid-off home and a healthy retirement account faces a deceptively simple question: should she start Social Security now, or wait until 70 for a bigger check? The math heavily favors waiting. The problem is funding the three-year gap without gutting her portfolio in a down market. One overlooked tool, a HECM Line of Credit, can solve that gap and, in this case, add roughly $186,000 to her lifetime financial position. The Situation in Plain English She is single, 67, and owns her home outright. Her question shows up constantly in retirement forums: how do you delay Social Security when your portfolio is your only other source of income, and a bad sequence of returns in the first few withdrawal years could permanently damage the plan? Here are the relevant facts: The difference is $815 a month for life, inflation-adjusted by COLA. Over roughly a 17-year remaining life expectancy at 70, that is $166,260 in nominal extra income. The Real Tension: Funding the Three-Year Bridge The delayed retirement credit is among the highest risk-free returns in personal finance. Each year of waiting past your full retirement age raises your monthly benefit by exactly 8%. Because HECM draws are debt rather than income, they avoid triggering higher Medicare IRMAA surcharges that taxable IRA withdrawals often cause. The standard move is to withdraw $42,000 annually from an IRA, but during a market downturn, selling shares locks in losses and shrinks the portfolio. A HECM Line of Credit changes this calculus by acting as a volatility buffer. On a $620,000 home, the initial line is roughly $245,000 to $310,000, depending on variable interest rates, which currently track near 5.5%. By funding the three-year gap with the line of credit instead of your portfolio, you secure a 24% permanent, inflation-protected boost to your Social Security check at age 70. Interest accrues on the loan balance, which fluctuates with market indices, and is settled only when the home is sold or the borrower passes away. As long as property taxes and insurance remain current, the loan is non-recourse to your other assets. How the Trade Actually Works Draw $42,000 annually from the HECM for three years, totaling $126,000. Your IRA remains fully invested, avoiding taxable withdrawals. You then claim your Social Security at 70 at the higher, delayed rate. Projecting 17 years forward, the $126,000 draw, accruing at a 5.5% variable rate, compounds to a loan balance of roughly $310,000. Assuming 3% annual appreciation, your home value grows from $620,000 to approximately $1.02 million. This leaves roughly $710,000 in net equity for heirs, compared to $1.02 million if the home remained debt-free. However, you gain $166,000 in extra Social Security, plus an IRA that compounded three extra years on the preserved $126,000. At a 6% return, that adds roughly $140,000 to your terminal portfolio value. Net of the home equity traded, this strategy nets approximately $186,000 in total lifetime wealth, before factoring in the massive value of avoiding sequence-of-returns risk during those crucial first years. The Three Realistic Options What to Evaluate First Think of the HECM line of credit as totally distinct from standard lump-sum loans. Its secret weapon is the unused growth feature: your borrowing power actually increases over time, making your limit at 75 much larger than at 67. Two simple filters reveal if this is your golden ticket. First, do you plan to stay put for at least seven to ten years? Upfront origination costs make shorter stays expensive. Second, is your priority lifetime security or maximum estate value? If it’s the former, trading roughly $310,000 in future home equity for a permanent $815 monthly raise, a protected portfolio, and safety from early market crashes is a brilliant bargain. If leaving the biggest possible inheritance is the goal, just fund the bridge from your IRA and accept the risk. By David Beren
Buying a home feels unaffordable. But so is owning one, seniors find
What percentage of seniors own their homes outright? Why do housing costs outpace senior income growth? How has multigenerational living grown recently? Even seniors who own their homes outright are becoming “house‑poor” as housing‑related expenses have surged far faster than incomes, leaving millions spending a large share of their earnings on housing costs. Buying a home feels unaffordable to millions of Americans, but so is owning a home, especially among seniors, data shows. Fifty-four percent of the nation’s 35 million mortgage-free homeowners are age 65 or older, a group that represents just over a third of all U.S. homeowners, according to housing research firm ResiClub. Among that population, roughly 64% own their homes outright, it said. Yet, a record 12.5 million senior households, or more than a third of the population ages 65 and older, may be feeling “house poor,” or spending a disproportionately large percentage of their monthly income on housing costs, data shows. In 2024, they spent more than 30% of their income on housing, and half of them spent more than 50%, according to U.S. Census data. The government’s general rule of thumb is to spend no more than 30% of gross income on housing, including rent or mortgage payments, property taxes, insurance and utilities to avoid being cost-burdened. Since 2019, older adult households also made up roughly half of all newly cost-burdened households, according to the Harvard Joint Center for Housing Studies. “That’s a sign that housing affordability challenges don’t disappear at retirement age, and can be extra problematic for older adults on fixed incomes,” wrote Christine Healy, head of brand at CareScout, in a report. “Even seniors who did everything right aren’t safe,” she wrote. “For homeowners who paid off their mortgages entirely, median housing costs have still climbed 35% since 2019 – about 1.5 times faster than their incomes grew.” What’s causing the housing squeeze for seniors? About every expense related to housing has skyrocketed since the pandemic, faster than the 28.67% overall pace of inflation. That makes it harder for seniors − even those without a mortgage − to keep up, experts said. For instance, rent since the pandemic has increased 36.2% nationally, according to property listings company Zillow’s March report, and median property taxes rose about 30% from 2019 to 2024, the nonprofit Tax Policy Center said. Home insurance premiums surged 40.4% from 2019 to 2024, according to the rate comparison site LendingTree. Electricity prices soared 40% from 2020 to 2025, according to the Bureau of Labor Statistics. “These staggering increases have proved insurmountable for many Americans, but no group has been more impacted than seniors, especially those on fixed incomes,” Healy said. “Property taxes, utilities and insurance are now eating away at their savings – and unlike younger Americans, many seniors can’t simply take on a second job or trade up to a higher salary to compensate.” Suffering differs geographically Seniors are being hit harder in some places more than others, according to an analysis by the long-term-care solutions company CareScout that looked at the share of seniors who spend 30% of their income on housing, real estate taxes, home insurance, electric bills, assisted living costs, and more across the United States.l Seniors are most likely to be cost-burdened in California and least so in West Virginia, which was helped by having the nation’s lowest property taxes ($881) and the smallest share of households facing high insurance costs (10.2% pay $2,000 or more), CareScout said. How can seniors cope? Preparing early is always the best way to avoid a housing squeeze, said Steve Azoury, chartered financial consultant and owner of Azoury Financial. He suggested: Medora Lee
A 70 Year Old With $800K Faces Long-Term Care Decision That Could Cost $190K a Year
Quick Read Margaret is 70, single, healthy, and owns her home outright. She has $800,000 in retirement assets and a budget that works. The line item that does not appear on her spreadsheet is long-term care. And it’s the one most likely to break the plan. This scenario shows up frequently on the Bogleheads forum and call-in financial advice shows. A financially disciplined widow or never-married retiree is comfortable today, but quietly worried about the nursing home math. The worry is justified. Long-term care is the single largest unplanned risk in a middle-class retirement. Consider our fictional Margaret as a typical example: Why the math is unforgiving If Margaret needed care for 2.2 years (the national median), the cost at the low end would come in at $255,200. A retiree with $800,000 can absorb that. But many people end up in long-term care for longer periods. Alzheimer’s patients average four to eight years of care. At $190,000 a year for four years, the bill is $760,000. This would basically empty Margaret’s accounts and leave her dependent on Medicaid in a facility she did not choose. Inflation is not on her side either. Services inflation is running near 3.4% year over year, and it has been stuck in the 3.3% to 3.6% range for a full year. Labor-intensive care costs historically outpace headline CPI. Planning at today’s prices understates what the actual cost will likely be. Three paths worth considering Treat Medicaid spend-down as a last-resort backstop. Eligibility generally requires countable assets below $2,000 for a single applicant, and the look-back rules penalize late gifting. One favorable wrinkle: Yields have repriced higher. The 5-year Treasury is near 4.2% and the 10-year near 4.6%, with the 10-year sitting near the top of its one-year range. A conservative bond ladder finally generates real income, which strengthens the self-insurance option. What Margaret should do now Get a quote for a hybrid policy and a stand-alone LTC policy before the next birthday. Underwriting tightens with each year, and the Fed funds rate near 4% means insurers are pricing reserves at favorable assumptions for buyers right now. Carve out a dedicated care reserve inside the portfolio. Treat it as untouchable for vacations or gifting. A bond ladder maturing between years five and 15 of retirement matches the statistical window when care is most likely to start. The mistake to avoid is waiting. Postponing turns a manageable planning issue into an emergency that could wipe out your retirement accounts. By Carl Sullivan
3 reverse mortgage advantages to know this May
News in late April that the Federal Reserve was keeping interest rates on hold once again, and not proceeding with a rate cut that would benefit millions, wasn’t unexpected. But it was still a disappointing development for many, especially seniors and older adults who have been contending with elevated interest rates on everything from mortgages to credit cards for multiple years now. While a Fed rate cut wouldn’t have automatically led to dramatically lower rates, it would have certainly helped. And with no Fed meeting on the calendar for May and no rate cut even planned right now for June, older adults tied to tight budgets may want to seriously consider looking elsewhere for financial relief. Their home could be a good place to start. Leveraging their accumulated home equity with a reverse mortgage, specifically, could help. This unique product is only available for homeowners ages 62 and older, but it could provide the financial boost these seniors need to weather today’s economic volatility while putting them back on a path toward regaining their financial freedom. And, this May specifically, could be a smart time to get started, as the product has unique advantages in today’s economic environment. Below, we’ll detail three advantages worth knowing now. 3 reverse mortgage advantages to know this May Not sure if a reverse mortgage is the right financial solution for you this month? Here’s why it may be: You won’t need to worry about interest rate changes The interest rate climate is a volatile one now. And, if you borrow your home equity via a home equity loan or home equity line of credit (HELOC), you’ll need to contend with that reality. A HELOC, in particular, can be difficult to manage as it has a variable rate that will change each month based on market conditions. That could mean a higher payment in June than in May and a higher one in July, too. A reverse mortgage doesn’t come with these stresses, however, as you’ll only be expected to repay what’s been withdrawn when the home is sold or in the event of the death of the homeowner. This is always an advantage for reverse mortgage borrowers, but especially so now, as it will essentially eliminate the anxiety of having to deal with today’s unpredictable interest rate climate. You have a lot to borrow from The average home equity level in the United States hit a record high in 2025. Right now, there are trillions of dollars considered borrowable by homeowners. So, if you’re an average homeowner, you likely have plenty of money to leverage. That can be used to pay off your existing mortgage, pay down your high-rate credit card debt, or simply for everyday expenses that have become harder to manage in today’s economy. Just understand that every dollar withdrawn will ultimately reduce the value of your home for beneficiaries. But if the end result is maintaining your financial security and aging at home with peace of mind, it can still be a worthy exchange. Cash-out refinancing isn’t feasible Mortgage interest rates are up by more than half a percentage point from where they were in early March. And, if you were to pursue a cash-out refinance instead of a reverse mortgage, this would be a problem, as the cash-out refinance would mandate that you take out a new loan at today’s higher rate (assuming you have a rate below today’s average in the mid-6% range). But that won’t be an issue with a reverse mortgage. In fact, with a reverse mortgage, you’ll often begin by paying off your existing mortgage loan in totality, removing it from the equation permanently. The bottom line A reverse mortgage has multiple advantages for seniors to seriously consider this May. By pursuing this option, older homeowners won’t need to deal with the stress of today’s high-interest rate climate. They will also have more to borrow here than they would with alternative funding sources like personal loans or credit cards, and they won’t need to worry about exchanging their current mortgage rate for a higher one, as they would with a cash-out refinance. So it may be worthwhile to speak with a reverse mortgage specialist this month, as they can help answer any questions you have and better help you decide on your next steps. By Matt Richardson
HECM vs HELOC
Why are HECM fees higher? Comparing a HELOC and a HECM line of credit based on structure, risk, and long-term value. The shift A HELOC and a HECM may look similar on the surface. They’re not. The real conversation isn’t about which is cheaper. It’s about which is more stable, flexible, and aligned with retirement. HECM vs HELOC Payments Line of credit growth Access and stability Loan term / due date Prepayment Insurance Annual fees Handling the “fees” objection A HELOC may look cheaper upfront, but it comes with payment risk, access risk, and a defined end date. A HECM removes required payments, grows over time, and is designed to last as long as the borrower remains in the home. The question shifts from cost to certainty. Bottom line A HELOC is a short-term lending tool. A HECM line of credit is a long-term retirement strategy. By Gabe Bodner
The Reverse Mortgage Line of Credit That Grows Untouched for 15 Years and Becomes a $700,000 Liquidity Buffer at 80
Quick Read Most retirees who think about reverse mortgages imagine them as a last resort, something to consider when portfolios run dry and options narrow. This framing causes a significant number of people to miss the most strategically interesting version of the product entirely: opening a Home Equity Conversion Mortgage line of credit at 65, never touching it, and watching the available borrowing capacity for fifteen years until it becomes one of the largest liquidity reserves on the balance sheet. The growth feature built into unused HECM lines of credit is genuinely underappreciated, and understanding how it works changes the calculus of when and why to open one. How the Untouched Line of Credit Grows When the HECM line of credit goes unused, the available borrowing capacity grows at a rate equal to the loan’s effective interest rate plus the 0.5% annual mortgage insurance premium charged by HUD. In the current rate environment, that combined growth rate runs approximately 7% to 7.5% per year on the unused portion of the line. Using HUD’s Principal Limit Factor tables, a 65-year-old borrower with a paid-off $1.2 million home qualifies for an initial line of credit in the range of $400,000, depending on the prevailing expected interest rate at origination. Left untouched at a 7.5% annual growth rate, that $400,000 compounds to approximately $1.1 to $1.2 million of available borrowing capacity by age 80. The home has not been sold, and no payments have been made, so the line simply grew because the borrower chose not to use it. Why This Matters as Longevity Insurance A retiree at 80 with $1.1 million in available HECM credit has a liquidity buffer that can absorb almost any financial disruption: a prolonged market downturn, an unexpected long-term care expense, or a period of elevated healthcare costs that strains the portfolio. The line functions as a backstop that becomes available precisely when it is most likely to be needed, late in retirement when sequences-of-returns risk is still present, and other options have narrowed. Wade Pfau’s research on buffer asset strategies consistently identifies the standby HECM line of credit as one of the most efficient tools for managing this late-retirement risk, not because it replaces income, but because it provides liquidity without forcing portfolio liquidation at the worst possible time. A retiree who can draw from a HECM line during a market downturn and repay or simply continue drawing as circumstances allow avoids the permanent damage that comes from selling depressed equity holdings to fund living expenses. The Mechanics That Have to Work in the Background Keeping a HECM line of credit active requires the borrower to continue paying property taxes, homeowner’s insurance, and basic maintenance on the property throughout the life of the loan. Failure to meet any of these obligations can trigger a due-and-payable event under 24 CFR 206.125, which would require repayment of any outstanding balance and could result in foreclosure if the loan balance exceeds the home’s value at that point. The upfront costs of originating a HECM include a mortgage insurance premium of 2% of the maximum claim amount, plus standard closing costs. On a $1.2 million home, the upfront MIP alone runs approximately $24,000, which is financed into the loan rather than paid out of pocket, but still represents a cost that factors into the strategy’s net benefit calculation. For a borrower who opens the line at 62 rather than 65, the initial principal limit is somewhat lower due to the younger age factor in HUD’s PLF table, but the longer compounding runway partially offsets that reduction. Who This Strategy Is Built For The standby HECM line of credit works best for retirees who own their home outright or nearly so, expect to remain in the home for at least 10 to 15 years, and have enough income from other sources to cover property taxes, insurance, and maintenance without straining the portfolio. It is not a strategy for retirees who are already drawing down assets rapidly or who anticipate needing to sell the home within a few years. For a single retiree with a paid-off home and a portfolio that may need to last 30 years, opening the HECM line early and leaving it completely untouched represents one of the more elegant longevity planning moves available under current HUD rules. The line grows quietly in the background while the rest of the retirement plan runs normally, and it becomes most powerful at exactly the age when most other options have become more limited. By David Beren