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‘I Don’t Think I’ll Make It to 80’: I’m 70 and Single. Should I Take Out a Reverse Mortgage or a Home-Equity Agreement?

Retirement in your seventies — especially if you’re single — isn’t about the perfect beach getaway or fancy brunches. It’s about figuring out how to stretch your money day-to-day when the nest egg doesn’t quite cover it all. I’ve worked with lots of folks who started with a decent savings cushion but still had tough decisions to make when their funds weren’t lasting like they hoped. These days, a big question I hear more often is: should you tap into your home’s equity with a reverse mortgage, or is a home-equity agreement a smarter move?

It’s not a simple yes or no. I’ve seen retirees who got tripped up by confusing details, but also many who found real peace of mind (and some extra cash) by choosing the right option for their situation. Let’s dive into the pros and cons, the little-known pitfalls, and when these choices might not work out as planned.

The Reverse Mortgage: Reliable but Complicated

Reverse mortgages, particularly the Home Equity Conversion Mortgage (HECM) backed by the government, are the classic choice here. You borrow against your home’s value, don’t have to make monthly payments, and the loan is paid back when you move, sell, or pass away. Sounds pretty straightforward, right? Well, in reality, it gets a bit messy.

One thing that surprises people: the upfront fees. They can be steep. Origination fees, mortgage insurance, servicing—all of it can total over $10,000 on a $300,000 home before interest even kicks in.

But here’s the good part: as long as you live in your home, you can’t be forced out just because you’re not making payments. That peace of mind is huge if you want to age in place.

Reverse mortgages make the most sense if you plan to stay put for a while. If you’re thinking, “I’m not sure I’ll make it to 80,” then be cautious. The fees upfront might end up costing more than you gain if you only need the money for a few years.

Another big thing to remember: you’re still responsible for property taxes and insurance. Falling behind on those can lead to foreclosure — something even careful folks can overlook.

Home-Equity Agreements: A New Alternative

Home-equity agreements (HEAs) are newer on the scene, with companies like Unison and Point leading the charge. The idea is you get a lump sum now in exchange for sharing a slice of your home’s future appreciation — usually over 10 to 30 years or when you sell. No monthly payments, no interest.

Sounds pretty sweet, but there’s a catch. You’re betting your home’s future value will stay the same or go up. If your home appreciates a lot, you might pay back two or three times what you borrowed.

HEAs usually work best if you plan to move within the next five to ten years or live somewhere where home prices tend to climb. In a flat or declining market, you might come out ahead. But predicting home values is tricky, and I’ve seen people get surprised by big payback amounts.

Also, not every home qualifies. Lenders are picky about location, condition, and how much equity you have. If your home’s unusual or you’ve just done big repairs, you might get turned down.

Who Benefits Most from a Reverse Mortgage?

• Planning to stay in your home for five years or more
• Have a good chunk of equity built up
• Are on top of paying property taxes and insurance

If you’re 70, single, and don’t have heirs who’d want the house, a reverse mortgage can be a real lifesaver. I’ve seen people use the money to pay off mortgages, clear credit card debt, or cover unexpected medical bills. For some, it means the difference between staying in their home or having to downsize.

But if your health is shaky or you expect to move soon — maybe to assisted living — these loans usually aren’t worth it. The fees can eat too much of your equity too fast.

Who Should Consider a Home-Equity Agreement?

• Expect to move within 10 years
• Want to avoid monthly payments
• Are okay giving up some future home gains for cash now

HEAs can be less risky if your local market isn’t booming. But in hot markets — think parts of California or New York — you might give up a big chunk of your home’s appreciation.

One neat perk: you can use the cash however you want, and if you sell early, there’s no penalty. I’ve had clients use the money to travel or help grown kids buy a home.

Watch Out for These Pitfalls

Neither option is perfect. Reverse mortgages often don’t work for condos in buildings that aren’t FHA-approved — and I’ve seen deals fall through last minute because of this.

Also, neither plan replaces the need for long-term care planning. If you have to move into assisted living, the loan becomes due, which can force a sale at the worst time. It’s easy to overlook these “what if” scenarios but vital to plan for.

What About Taxes and Benefits?

The money from reverse mortgages and HEAs isn’t taxable income. But how you use it can affect Medicaid eligibility. For example, if you take a big lump sum and leave it sitting in your bank account, it might disqualify you from benefits.

Also, if your home’s value has gone up a lot, you could face capital gains taxes when you sell — especially if you have an HEA and sell earlier than planned.

Other Options to Consider

Sometimes, renting out a spare room, downsizing, or a cash-out refinance might be better options — especially if you’re healthy and mobile. These aren’t flashy choices, but they can offer more flexibility and fewer surprises.

Final Thoughts

If you’re 70, single, and unsure about how long you’ll stay put, be careful about jumping into expensive, upfront products. Always run the numbers with a fee-only financial planner and think through the worst-case scenarios.

These aren’t “set it and forget it” deals. You’ll want to review your plan every couple of years.

Above all, don’t let fear or slick marketing push you into something. These tools can be helpful — but only if you truly understand what you’re signing up for.

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