Home equity guide
Four ways to put your home to work — and how to pick yours
Reviewed July 2026
For most homeowners heading into retirement, the house is the biggest asset on the board — often bigger than the 401(k). There are four main ways to turn that value into money that funds the next chapter. Each one is right for somebody, and wrong for somebody else. Here's the honest version of each.
The four options at a glance
| Option | Best when… | Watch out for |
|---|---|---|
| Reverse mortgage (HECM) | You're 62+, staying in the home long-term, and want monthly income or a standby credit line with no required monthly payment. | High upfront costs; the balance grows over time; heirs inherit less. HUD-approved counseling is required — use it. |
| HELOC | You have steady income for payments and want flexible funds for projects or a safety net you may never draw. | Variable rates; payments can jump when the draw period ends; the bank can freeze the line. |
| Cash-out refinance | You want one lump sum and can get a rate at or below your current mortgage rate. | Restarts the clock on your mortgage; closing costs; a higher monthly payment for years. |
| Sell and simplify | The house is bigger than your plans need, or the equity would fund the lifestyle better as cash — travel, a lock-and-leave condo, a place near the grandkids. | Moving costs and emotions are real; run the numbers on where you'd live next before listing. |
Start with the plan, not the product
The right choice depends on what the money is for. A one-time kitchen renovation, monthly income that outlasts savings, and buying the lake cabin are three different plans with three different best answers.
- One-time expense, comfortable making payments: HELOC or cash-out usually beats a reverse mortgage on cost.
- Monthly income gap, staying put 10+ years: a reverse mortgage deserves a serious look — after counseling.
- The house no longer fits the plan: selling may free more money and more freedom than any loan.
Estimate your numbers
Use the calculator below for a rough, educational picture of what each option could unlock. It's an illustration, not a quote — lenders will run exact numbers.