Use a Reverse Mortgage to Repair the House?

December 3, 2007, Reviewed January 27, 2010 , July 29, 2012, January 24, 2014, March 28, 2017

"I am 72 yrs old, my mortgage is paid off, I intend to live with my children in a year or two, at which point I will sell my house. In the meantime, I have some repairs to make and some credit card balances I would like to pay off. I am thinking of taking out a reverse mortgage, then paying it off when I sell. Good idea or not?"

Bad Idea. A reverse mortgage is not suitable for raising funds for a short period, because the upfront cost is so high. See Costs of a Reverse Mortgage.

The appropriate instrument to use for your purpose is a home equity line of credit (HELOC), on which the upfront cost is low -- sometimes zero if you shop carefully. See How to Shop For a HELOC.

Note however that when you use a HELOC, you must pay interest monthly, which means that you must draw enough to cover the interest payments in addition to the repairs. Within a 2-year period, the HELOC remains the better choice but this may not be the case over longer periods.

In or near retirement? The Professor’s Retirement Funds Integrator (RFI) might enhance your life during retirement.

Want to shop for a Reverse Mortgage from multiple lenders?

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