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, single, and not betting on reaching 80. That changes the math on every financial decision you make — especially when it comes to your home, likely your biggest asset. The question on the table: reverse mortgage or home-equity agreement? Both let you pull cash out of your house without a monthly payment. But they are very different animals, and picking the wrong one could cost you — or your heirs — big.
A reverse mortgage lets you borrow against your home's value while you keep the title. You don't repay it until you sell, move out, or die. If you genuinely don't expect a long runway, that structure can work in your favor — the loan balance grows over time, but so does the clock on when it comes due. For someone with a shorter time horizon, less interest accumulates than it would for a 55-year-old in the same position.
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A home-equity agreement is a different beast. You sell a slice of your home's future value to an investor in exchange for cash today. No interest charges, no monthly payments — but when the home eventually sells, that investor takes their cut of whatever the property is worth then. If home prices rise, you could end up giving away far more than you received. If you're not planning decades ahead, that upside-sharing risk may sting less for you than for a younger borrower.
Here's the tradeable angle: your life expectancy assumption is doing a lot of heavy lifting in this decision. A reverse mortgage generally favors shorter time horizons because compound interest has less time to erode your equity. A home-equity agreement can punish you if prices spike, regardless of how long you live. Neither option is inherently better — it depends on your cash needs, your heirs' expectations, and how confident you are in that timeline you've set for yourself.
Before you sign anything, run the numbers with a HUD-approved housing counselor — it's actually required for reverse mortgages, and it's free. Know exactly what you're giving up, in both scenarios, before you hand over a piece of your home. Continue reading at MarketWatch.com
