Reverse Mortgage vs. Home-Equity Agreement at 70: Which Wins?
A 70-year-old single homeowner weighs two ways to tap home equity. Here's how to think about the trade-offs.
You're 70, you're single, and you don't expect to live past 80. That changes the math on home-equity products in a big way. When your time horizon is a decade or less, the decision between a reverse mortgage and a home-equity agreement isn't just financial — it's personal.
A reverse mortgage lets you pull cash from your home without monthly payments, but the loan balance grows over time as interest compounds. If you're confident you won't outlive the loan, that compounding matters less. The bank gets paid when you sell, move out, or die — and with a 10-year window, you're not handing over decades of equity growth.
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A home-equity agreement (HEA) works differently. A company gives you a lump sum today in exchange for a slice of your home's future value. No interest charges, no monthly payments — but the company profits if your home appreciates. If prices stay flat or fall, you might come out ahead. If your neighborhood booms, you could give up more than you expected.
The brutal honest take: if your health picture is clear and your timeline is short, a reverse mortgage's compounding interest is less dangerous than it looks on paper. An HEA hedges against longevity risk you may not have. Run both scenarios with actual numbers from lenders before signing anything. The wrong choice here can eat into the inheritance you planned to leave — or leave you short on cash when you need it most.
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