To make this strategy work, homeowners have a couple of options:
sell your home, buy one that’s cheaper and pocket the difference (also known as downsizing);
or, if homeowners are 55 years and older, take out a reverse mortgage, which provides up to 55% of the market value of a primary residence, tax-free.
Although a reverse mortgage charges monthly interest on the amount borrowed, you don’t have to make any payments—neither interest nor principal—until you sell the house, move out of your house, default on the loan or the last homeowner dies.
Each approach has its advantages and disadvantages. Here are some of the factors that you should consider before deciding which one is best for you…