Reverse Mortgage: Pros and Cons for Women in Their 60s

What to Know Before Tapping Home Equity in Retirement

For many women in their 60s, home equity is one of their largest assets.

If you're retired or nearing retirement and concerned about cash flow, a reverse mortgage may appear to offer a lifeline. But the decision isn’t simple. While a reverse mortgage can provide flexibility and income, it also comes with costs, complexity, and long-term implications.

Before using your home as a source of retirement funding, it's essential to understand how reverse mortgages work, who qualifies, and when it might—or might not—be the right move.

What Is a Reverse Mortgage and How Does It Work?

A reverse mortgage is a loan that allows homeowners aged 62 or older to convert part of their home equity into cash—without selling the home or making monthly mortgage payments.

Instead of you paying the lender, the lender pays you. You can receive the money as a lump sum, monthly income, line of credit, or a combination of these.

Over time, the loan balance grows (due to accruing interest), and is repaid when the homeowner sells the home, moves out permanently, or passes away.

Most reverse mortgages today are Home Equity Conversion Mortgages (HECMs), which are insured by the federal government and regulated by the U.S. Department of Housing and Urban Development (HUD).

Types, Structures, and Who Qualifies

The most common reverse mortgage is the HECM, but there are also proprietary reverse mortgages offered by private lenders for higher-value homes.

Basic Qualification Requirements:

• You must be 62 or older

• The home must be your primary residence

• You must own your home outright or have a significant amount of equity

• You must demonstrate the ability to pay property taxes, homeowners insurance, and maintenance costs

• A financial assessment will be performed to evaluate your credit and income

Loan amounts are based on your age, home value, interest rates, and available equity.

Pros and Cons of Reverse Mortgages

Pros

• No Monthly Mortgage Payments You don’t have to make payments on the loan as long as you live in the home and meet the conditions of the loan.

• Flexible Access to Cash Funds can be used for any purpose—covering living expenses, healthcare costs, or supplementing retirement income.

• You Retain Home Ownership You remain the homeowner and can live in the home for the rest of your life.

• Non-Recourse Loan You (or your heirs) will never owe more than the home is worth when the loan is repaid.

Cons

• High Fees and Closing Costs Origination fees, mortgage insurance, and servicing fees can reduce the amount you receive—and add to the loan balance.

• Interest Accrues Over Time Since you’re not making monthly payments, the loan balance grows, which reduces the equity in your home over time.

• Reduces Inheritance Because the loan must be repaid when you leave the home, your heirs may have to sell the property or pay off the loan to keep it.

• Risk of Foreclosure If you don’t pay property taxes, homeowners insurance, or maintain the property, the loan can become due—and you could lose your home.

When a Reverse Mortgage May—or May Not—Be Right

It Might Be Right If:

• You plan to stay in your home long-term

• You have a significant amount of home equity but limited retirement income

• You don’t intend to leave the home to heirs, or they’re aware and supportive of the plan

• You want to age in place and need to fund home modifications or in-home care

It Might Not Be Right If:

• You may move or downsize within the next few years

• Your heirs intend to keep the home and would struggle to repay the loan

• You rely heavily on government benefits (like Medicaid) that could be impacted

• You don’t have the income or resources to maintain the home and stay current on taxes and insurance

Ways to Use Reverse Mortgage Proceeds Wisely

The way you use the funds from a reverse mortgage can make a big difference in your long-term financial security.

• Paying Off Existing Debt Freeing yourself from high-interest debt or an existing mortgage can improve monthly cash flow.

• Creating an Emergency Reserve Using a reverse mortgage line of credit gives you access to funds only when needed—reducing interest accrual.

• Funding Home Repairs or Modifications Reverse mortgages can help fund aging-in-place upgrades such as grab bars, stair lifts, or walk-in tubs.

• Bridging Retirement Gaps Supplementing income in early retirement can help you delay Social Security or avoid withdrawing too much from investment accounts during down markets.

  
  

Example Scenarios and Side-by-Side Comparison

Example 1: Elaine, age 66 Elaine is divorced and lives alone. She owns her home outright, has limited retirement savings, and wants to remain in her home. A reverse mortgage provides monthly income and a safety net for future care needs. Her adult children are aware of her plan and don’t intend to keep the home.

Example 2: Linda, age 65 Linda and her husband plan to move to a smaller home in five years. They consider a reverse mortgage but realize the closing costs and short time horizon make it a poor fit. Instead, they explore downsizing now and investing the proceeds to create retirement income.

Feature	Elaine (Stays in Home)	Linda (Plans to Move)
Home Equity	$400,000	$450,000
Use of Funds	Monthly cash flow, line of credit	N/A
Time Horizon	15+ years	<5 years
Reverse Mortgage Fit	✅ Likely appropriate	❌ Not ideal

Questions to Ask a Lender—and Red Flags to Watch For

If you're considering a reverse mortgage, work with a reputable, FHA-approved lender and ask the following:

• What are the total fees and upfront costs?

• How does the interest rate work—fixed or variable?

• Can I choose how to receive the funds (lump sum, line of credit, monthly)?

• What happens if I move, pass away, or sell the home?

• Will this loan affect my eligibility for government benefits?

Red Flags:

• High-pressure sales tactics

• Promises that sound too good to be true

• Suggestions to invest loan proceeds in annuities or risky products

• Lack of clear explanation around fees, interest, or repayment

Remember: a required counseling session with a HUD-approved counselor is part of the HECM process—and an important opportunity to ask questions in a neutral environment.

Final Thoughts

For women in their 60s, a reverse mortgage can be either a financial lifeline or a costly misstep.

Used wisely, it can help you remain in your home, access much-needed income, and preserve other retirement assets. But it’s not a decision to make lightly. The costs, obligations, and long-term impact on your estate must be fully understood.

If you're considering a reverse mortgage as part of your retirement strategy, we can help you evaluate the fit—and explore other options that may provide greater flexibility or security.