Best Ways & Decision Guides
Best Ways to Get Money From a Paid-Off House
Owning your home free and clear opens several options.
[Placeholder copy — review before publishing. Not financial advice.]
Side by side
| Feature | Reverse Mortgage (HECM) | HELOC | Home Equity Loan | Cash-Out Refinance | Selling Your Home |
|---|---|---|---|---|---|
| Monthly payment required? | No required monthly mortgage payment; taxes, insurance and upkeep still required. | Yes — interest-only during draw, then principal + interest. | Yes — fixed monthly principal + interest. | Yes — a new, often larger, monthly mortgage payment. | No mortgage; you'll pay rent or a new home's costs. |
| Can you stay in the home? | Yes — as long as it remains your primary residence and loan terms are met. | Yes, while payments are made. | Yes, while payments are made. | Yes, while payments are made. | No — you move. |
| Age requirement | 62+ for a HECM (youngest borrower). | No age requirement. | No age requirement. | No age requirement. | None. |
| Income & credit considerations | Financial assessment reviews willingness and capacity to pay property charges. | Full income and credit underwriting; can be harder on fixed incomes. | Full income and credit underwriting. | Full underwriting; debt-to-income limits apply. | None to sell; buying or renting next may require qualification. |
| How equity is accessed | Lump sum, monthly payments, line of credit, or a combination. | Revolving credit line during a draw period. | One lump sum at closing. | Replaces your mortgage with a larger one; difference paid in cash. | Full net proceeds after the sale. |
| Repayment | Due when the last borrower sells, moves out permanently, or passes away. | Monthly payments; balloon or repayment period after draw ends. | Fixed monthly payments over the term. | Monthly payments over a new term (often 15–30 years). | Any existing mortgage is paid off at closing. |
Advantages & drawbacks
Reverse Mortgage (HECM)
Major advantages
- Frees up monthly cash flow
- Federally insured, non-recourse (HECM)
- Flexible payout options
Major drawbacks
- Higher upfront costs
- Loan balance grows over time
- Leaves less equity for heirs
HELOC
Major advantages
- Lower upfront costs
- Pay interest only on what you use
- Preserves more equity
Major drawbacks
- Required payments
- Variable rates
- Line can be frozen or reduced
Home Equity Loan
Major advantages
- Predictable fixed payment
- Usually lower costs than a reverse mortgage
Major drawbacks
- Adds a monthly payment
- Interest on the full amount immediately
Cash-Out Refinance
Major advantages
- May lower your rate in some markets
- Single loan
Major drawbacks
- Resets the loan clock
- Closing costs
- Higher payment in retirement
Selling Your Home
Major advantages
- Unlocks all available equity
- Ends home maintenance responsibilities
Major drawbacks
- Moving costs and commissions
- Leaving community
- Possible capital gains
Who each option may fit
Reverse Mortgage (HECM)
May fit if you…
- Plan to stay in the home long term
- Want to reduce or remove a mortgage payment
- Have meaningful equity
May not fit if you…
- Plan to move within a few years
- Can't keep up with taxes, insurance and repairs
- Top priority is leaving the home debt-free
HELOC
May fit if you…
- Steady income to cover payments
- Short-term or occasional cash needs
May not fit if you…
- Tight monthly budget
- Need cash flow relief rather than more debt service
Home Equity Loan
May fit if you…
- One-time expense with a known cost
- Comfortable income for payments
May not fit if you…
- Limited or shrinking income
Cash-Out Refinance
May fit if you…
- Income to qualify and long time horizon
May not fit if you…
- Want to be mortgage-free in retirement
Selling Your Home
May fit if you…
- Home no longer fits your needs
- Ready to move
May not fit if you…
- Strong desire to age in place
Questions to help you decide
- Do you plan to stay in your home for many years?
- Is lowering monthly expenses more important than preserving equity?
- Can you comfortably make a new monthly payment on your current income?
Bottom line: A paid-off home maximizes proceeds from most options; weigh payments versus equity preserved.
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