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If you're an older homeowner, your home equity - the difference between the market value of your home and the outstanding mortgage(s) on it - can be one of your largest (if not your largest) assets. Many folks nearing retirement and retirees who own their homes find that their home equity is surprisingly large. Why? First, if all goes well, the value of your property increases over the years. Second, all those years of monthly mortgage payments add up; by the time you're ready to retire, your mortgage balance should be low or even zero.
Your house's equity can help supplement the cost of your retirement . . . with or without selling. Of course, the obvious option is selling your house and buying or renting something less expensive. The less-obvious option is taking out a reverse mortgage that provides you with income based on your home's equity without selling your home. In this section, we cover these important options along with important tax and personal issues that you need to weigh before deciding what to do with your home when you retire.
