Reviewed by Samantha S. Peel, Mortgage Loan Officer
NMLS #2685482 · Licensed in Georgia & South Carolina · More than 12 years working with seniors and their families in senior living before joining MCS. Last reviewed September 26, 2026.
Start with the real number, not the loan
Before comparing any financing, add up what staying actually costs each month: taxes, insurance, utilities, upkeep, and any care coming into the home. Then compare that against income. Families are often surprised in both directions — sometimes the gap is smaller than feared and no loan is needed, and sometimes it is large enough that no amount of borrowing fixes it. That arithmetic determines which of the options below is even relevant.
The options on the table
Every one of these is a real answer for somebody. None of them is the right answer for everybody.
FHA-insured HECM reverse mortgage
MCS may be able to help
- How it works
- A federally insured loan against home equity for homeowners generally 62 or older. No required monthly principal and interest payment while an eligible borrower lives in the home and keeps up taxes, insurance, and maintenance. The balance grows over time.
- Best when
- There is substantial equity, the homeowner intends to stay several years or longer, and monthly cash flow is the problem rather than a one-time expense.
- Watch out for
- Upfront and ongoing mortgage insurance and closing costs. The balance grows rather than shrinks, which reduces what heirs inherit. Independent HUD counseling is required. Proceeds can affect Medicaid and SSI eligibility.
HECM line of credit
MCS may be able to help
- How it works
- The same FHA-insured loan, taken as a standby line rather than a lump sum. The unused portion of the line grows over time under current program rules.
- Best when
- Nothing is needed today but the family wants a cushion in place before a health event, and the homeowner is likely to stay in the home long term.
- Watch out for
- Upfront costs are incurred whether or not the line is ever drawn. If the plan is to move within a few years, those costs are hard to justify.
HELOC or home equity loan
Often through your own bank
- How it works
- A conventional second mortgage or revolving line, repaid with monthly payments. Underwritten on income and credit like any other loan.
- Best when
- The homeowner has reliable income to make payments, needs a smaller sum, and wants lower upfront cost than a reverse mortgage.
- Watch out for
- It requires monthly payments, which is exactly the pressure many families are trying to relieve. Lines can be frozen or reduced by the lender. Income and credit requirements are real, and fixed-income retirees are often declined.
Cash-out refinance
MCS may be able to help
- How it works
- Replace the existing mortgage with a larger one and take the difference in cash, with a required monthly payment.
- Best when
- There is a mortgage at a higher rate than today's, sufficient documented income, and a specific one-time need.
- Watch out for
- It restarts the amortization clock and keeps a monthly payment in place, often for 30 years. For an 80-year-old on fixed income this is usually the wrong tool.
Do nothing, and re-check in six months
Costs nothing, pays us nothing
- How it works
- Change no financing. Revisit after a benefits review, a care assessment, or the next tax bill.
- Best when
- The shortfall is small or temporary, health is stable, or the family is still in the shock of a recent diagnosis or loss and is not ready to decide.
- Watch out for
- Waiting has a cost if a health event forces a rushed decision later. Set an actual date to revisit rather than letting it drift.
Benefits and programs already available
Costs nothing, pays us nothing
- How it works
- Veterans' benefits, county property-tax exemptions for seniors, utility and weatherization assistance, Medicare-covered in-home services, and area agency on aging programs.
- Best when
- Always check first. Georgia and South Carolina both offer senior property-tax relief that many eligible homeowners never claim.
- Watch out for
- Applications take time and some have asset tests. This is where an Eldercare Locator call or an elder-law attorney earns their keep, not a lender.
Sell and move
Pays us nothing
- How it works
- List the home, use the proceeds for a smaller home, a rental, or a senior community.
- Best when
- The house is too large, too remote, or too hard to maintain; or the equity is needed and the attachment to this particular house is manageable.
- Watch out for
- Moving costs money and energy, and the emotional weight is real. But for a family whose honest answer is “the house does not work anymore,” borrowing against it only delays the move and spends the equity that would have funded it.
When a loan against the home is the wrong answer here
We turn down or talk families out of this loan regularly. These are the situations where borrowing against the home makes things worse:
- The homeowner is likely to move within a few years. Upfront costs are front-loaded. Over a short horizon they are rarely worth it.
- The shortfall is larger than the equity can cover. A reverse mortgage that buys eighteen months before a forced sale has spent the equity that would have paid for assisted living.
- The homeowner cannot keep up taxes, insurance, and maintenance. These remain the borrower's responsibility, and failing to meet them can trigger foreclosure. A loan does not solve this; it adds risk.
- Needs-based benefits are in the picture. Loan proceeds held in an account can affect Medicaid and SSI eligibility. Talk to an elder-law attorney before, not after.
- The family has not actually talked about it. If adult children learn about this at the closing table, the decision will strain the family regardless of whether the math was right.
Questions worth asking before anyone decides
Bring these to a family conversation, a counselor, or any lender — including us.
- How many more years does the homeowner realistically want to and safely can stay in this house?
- What is the actual monthly gap, after every benefit and exemption has been claimed?
- If health declines in three years, does this plan still work — or does it leave nothing to pay for care?
- What does the family expect to happen to the house, and has anyone said that out loud?
- What will this cost in total — upfront, ongoing, and in balance growth over the years we expect to hold it?
- What happens if we do nothing for six months?
Independent places to check our work
You should never take a lender’s word as the only word. These organizations are not affiliated with Mortgage Capital Services and do not pay us or receive payment from us.
Important: This page is educational and is not financial, legal, or tax advice, a recommendation, or a commitment to lend. Loan program availability, costs, and requirements are set by lenders and investors and may change. All loans are subject to credit approval and property eligibility. Reverse mortgage borrowers remain responsible for property taxes, homeowners insurance, property maintenance, and other loan obligations. Loan proceeds may affect eligibility for Medicaid, Supplemental Security Income, and other needs-based benefits. Consult a qualified financial, tax, or legal advisor about your own circumstances. Mortgage Capital Services, LLC, NMLS #2694379 · Samantha S. Peel, NMLS #2685482 · Licensed in Georgia & South Carolina · Equal Housing Opportunity.
