Waiting to use your home equity might feel like a smart move, but with a reverse mortgage, time could be one of your biggest assets.
For years, reverse mortgages were often viewed as a last resort, something to consider only after savings ran low or an emergency hit. Today, retirement researchers and financial planners are taking a broader view of home equity, looking at how it can help homeowners prepare for expenses and create more financial flexibility.
That’s where timing comes in. Waiting until you need a reverse mortgage may feel like the cautious choice. But in some cases, putting it off could ultimately result in less money and missed chances to build a more resilient long-term financial strategy.
You don’t have to rush into a decision. But understanding your options sooner can help you decide whether waiting makes sense for you.
Here’s what to know about the timing of a reverse mortgage — and why “later” isn’t always the better choice.
When Should You Take Out a Reverse Mortgage?
While there is no single right age, the best time to explore a reverse mortgage is often as part of a proactive approach, before you need the money. Setting up a reverse mortgage early — specifically one where funds are drawn as a line of credit1 — can create a cash reserve that doesn’t depend on the stock market and leaves room to plan instead of react.
The right timing, of course, depends on your individual circumstances. From your age, home value, and other assets, to current interest rates and how long you plan to stay in your home, there are many factors to consider before making a decision.
The Real Cost of Waiting
It’s natural to hold off on making a big financial decision until the need feels more immediate. But if you’re considering using your home equity, timing is an important factor to weigh — and it comes with tradeoffs that aren’t always obvious. Here are three potential “costs” of waiting.
Cost #1: Missing Out on Line of Credit Growth
A reverse mortgage line of credit¹ offers a feature you may not know about: the unused portion can grow over time, increasing the amount available for you to borrow later.²
This is where timing comes in. Opening a line of credit earlier gives that growth more time to add up.² For example, a homeowner who opens one at 65 and leaves it largely untouched may have more funds available at 80 than someone who waits until then to apply. The outcome depends on factors such as interest rates, home value at the time of application, and how much credit is used.
“Most people think of a reverse mortgage as something you turn to when you’ve run out of other options. But the homeowners who get the most flexibility are often the ones who get one before they need it.” — Jerry Auippa, Reverse Mortgage Consultant, Longbridge Financial
Cost #2: Fewer Options When the Market Drops
Market downturns are a normal part of investing. In retirement, though, the timing becomes more critical. If you have to sell investments while their value is down to cover living expenses, you’ll have less money invested when the market recovers. This can make it harder for your savings to last, especially if it happens early in retirement. This is known as the sequence of returns risk or “sequence risk” for short.
A reverse mortgage line of credit1 can act as a buffer, giving you another way to cover expenses while the market is down. Instead of selling investments at a loss, you can draw from your line of credit. When the market recovers, you may choose to use your investments again. You can also make voluntary repayments3 to help replenish your available credit.
The catch: having that option ready takes time. Applying for a reverse mortgage includes counseling, an appraisal, and underwriting. If you wait until you need the funds, your line of credit may not be ready when you need it most.
As always, before making any financial decision, we recommend talking with a trusted financial professional who can help you weigh the benefits and costs based on your unique situation and goals.
Cost #3: Missing the Chance to Plan Ahead
If you wait until you urgently need funds to explore your home equity, you may also miss opportunities to make life easier along the way. Considering a reverse mortgage earlier gives you time to see how it could help you:
- Keep more room in your monthly budget. A reverse mortgage pays off your existing mortgage at closing, eliminating that large monthly expense. And because monthly payments are optional with a reverse mortgage, you could free up even more cash for other expenses. Of course, you must still meet loan obligations such as keeping current with property taxes, homeowners insurance, and home maintenance.
- Explore when to take Social Security. Home equity could help cover expenses while you wait to claim Social Security, potentially increasing your monthly benefit up to age 70.4
- Make your home more comfortable for the years ahead. Planning for home modifications like a first-floor bedroom, grab bars, or a walk-in shower now gives you time to compare options and make changes before you urgently need them.
- Get ahead of changing circumstances. Interest rates, home values, and your finances can change. Exploring your options while you’re in a strong position gives you more control over the outcome.
You don’t have to wait for a financial challenge to start the conversation. Looking ahead can help you make the most of your options while you have time to weigh them.
Does Age Affect Reverse Mortgage Amounts?
Yes. Age is one of the main factors in determining how much you can borrow, along with other factors like interest rates and your home’s value. In general, the older you are, the more equity you may be eligible to access.
So why not just wait until you are older for a bigger initial amount? Because the initial amount is only part of the picture. Opening a line of credit¹ earlier gives unused credit more time to grow² and could put funds within reach before a financial need arises.
Here’s how the two approaches compare:
| What to Consider | Getting a Reverse Mortgage Earlier4 | Waiting Until Later4 |
|---|---|---|
| Starting loan amount | Generally, a lower percentage of your home’s value | Generally, a higher percentage of your home’s value |
| Line of credit growth1,2 | More time for unused credit to grow | Less time for unused credit to grow |
| Access during a market downturn | Buffer already in place | May not be ready when needed |
| Changes in rates and home values | Starting loan amount is based on today’s rates and home value | Future rates and home value could mean more — or less — available to borrow |
So, is it better to get a reverse mortgage earlier or later?
The right timing depends on your situation. If you plan to stay in your home for years and want access to funds for future expenses, establishing a line of credit¹ earlier may be worth considering.
If you expect to move soon or may never use the funds, waiting could make more sense. A reverse mortgage comes with upfront and ongoing costs, so it’s important to weigh those against the potential benefits.
A licensed reverse mortgage professional from a reputable lender can walk you through different scenarios using your home’s value, your age, and current interest rates.
Give Yourself Time — and Options
Waiting to use home equity can feel like the safe choice, but it has costs of its own: less time for a line of credit to grow,2 no buffer when markets fall, and fewer chances to plan on your own terms. Getting a reverse mortgage early doesn’t mean you have to use it right away. It means you’ll have options when you need them.
Curious how timing could affect your options? A Longbridge Reverse Mortgage Consultant can walk you through the numbers for your home and goals, with no pressure or obligation. Get a free reverse mortgage quote or call 855-523-4326.
Frequently Asked Questions
When is the best time to get a reverse mortgage?
The right timing depends on your situation, but it’s worth exploring your options before you urgently need funds.Opening a reverse mortgage line of credit1 early gives unused funds time to grow2 and puts a reserve in place before a market downturn or unexpected expense.
Is it better to get a reverse mortgage as soon as you are eligible or wait?
It depends on your goals. Waiting may mean qualifying for a larger starting amount, while opening a line of credit earlier gives it more time to grow.² Your plans for your home, financial goals, and the loan’s costs can help you decide which approach makes sense.
Does age affect how much you can get from a reverse mortgage?
Yes. Older borrowers generally qualify for a higher percentage of their home’s value. Interest rates and home value also affect the amount.
Does a reverse mortgage line of credit really grow?
Yes. With an adjustable-rate reverse mortgage line of credit, the unused portion of your line of credit grows over time.¹,² This increases the credit available to borrow — it isn’t interest earned on savings.
Can a reverse mortgage help with stock market risk in retirement?
It may give you more flexibility. A reverse mortgage line of credit¹ can provide funds to cover expenses, helping you avoid selling investments while their value is down. A trusted financial professional can help you weigh this approach against the loan’s costs and your overall financial situation.