Senior homeowners can tap into their home equity in a variety of ways, whether that means taking a reverse mortgage, a home equity line of credit (HELOC) or cash-out refinance. But when it comes to deciding between these different extraction methods, reverse mortgages can have a positive impact on financial well-being of borrowers, according to the results of a recent study.
Extracting home equity through borrowing allows households to smooth consumption access liquidity without the substantial costs of selling the home. It also may allow seniors to pay-off higher cost debt and diversify their asset portfolio, says the studyfrom Ohio State University titled, “How Home Equity Extraction and Reverse Mortgages Affect the Financial Well-Being of Senior Households.”
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