Reverse Mortgage or Sell: Which Makes Sense for You?
A reverse mortgage lets you stay in your home and draw on its equity without a monthly payment, but the amount owed grows over time and reduces what’s left for your heirs. Selling gives you a lump sum you can use however you want, but it means leaving the house. For most San Diego retirees, the right answer depends on whether you plan to stay in the home for five more years or more, and how much you need the equity to do right now.
Melina Rissone has spent years helping San Diego retirees weigh exactly this kind of decision. As a Certified Senior Advisor and Seniors Real Estate Specialist, she is often the first call a retiree makes before they talk to a lender, because the real estate side of this decision usually matters as much as the financing side.
Retirees in Bankers Hill, Point Loma, and Mission Hills bring up this question constantly: should you tap what your home equity can do for you in place, or sell and start fresh somewhere that fits better? Both paths are legitimate. Neither is automatically better. Here is how to think it through.
How a Reverse Mortgage Actually Works
A reverse mortgage, most commonly a Home Equity Conversion Mortgage (HECM) backed by the FHA, lets homeowners 62 and older convert part of their home equity into cash: a lump sum, a line of credit, monthly payments, or some combination. You keep the title. You keep living there. There is no monthly mortgage payment as long as you meet the loan terms.
The 2026 HECM lending limit is $1,249,125, but that number is a ceiling, not a promise. What you actually qualify for depends on your age, current interest rates, and the lesser of your home’s appraised value or that cap. Older borrowers typically access a higher percentage of their equity than younger ones. On a home at or above the 2026 limit, a 70-year-old borrowing at an expected rate around 5.5% might access somewhere in the neighborhood of 40 to 45% of the home’s value, not the full amount.
The costs are real and worth understanding upfront:
- An upfront FHA mortgage insurance premium of 2% of the loan amount
- An ongoing annual mortgage insurance premium of about 0.5%
- A required HUD-approved counseling session before you can apply
- Interest that accrues monthly on what you owe, which means the amount grows over time rather than shrinking
You are still responsible for property taxes, homeowner’s insurance, HOA dues, and upkeep. Fall behind on those, and the lender can require a portion of the loan to be set aside to cover them, or in a worst case, call the loan due. On the upside, a HECM is a non-recourse loan: you or your heirs will never owe more than the home is worth when it’s eventually sold, even if the amount owed has grown past that point.
A reverse mortgage tends to make the most financial sense for someone planning to stay in the home for five years or more. If you are thinking about moving in the next year or two anyway, the upfront costs are hard to justify. Melina often hears from retirees only after they’ve already talked to a lender about this option, and she’d rather be part of that conversation earlier, since the real estate side changes the math.
What Selling Gives You Instead
Selling converts your equity into cash all at once, with no ongoing interest accruing against it and no requirement that you stay put. For a retiree who no longer wants the maintenance, the stairs, or the square footage, that flexibility is often the bigger draw than the dollar amount itself.
The trade-off is obvious: you have to move. That might mean downsizing to a smaller place in San Diego, relocating near family, or moving into a retirement community. It also means paying the usual costs of selling in retirement: agent commissions, San Diego County’s documentary transfer tax, minor repairs, and staging, though none of that requires taking on new debt the way a reverse mortgage does.
California retirees selling a long-held home also have a real tax question to work through: Proposition 19 lets homeowners 55 and older transfer their existing property tax base to a replacement home purchased within California, under specific rules on timing and price. Whether that applies to your situation, and how the math works out, is a question for a tax professional, not a blanket assumption. It’s a genuine advantage worth exploring if you plan to buy again after selling.
Selling also gives you full control of the funds today. Some retirees use the proceeds to buy a smaller home outright and bank the difference. Others invest it, help family, or fund long-term care. A reverse mortgage’s line of credit grows over time too, but it stays tied to the home; sale proceeds are yours to deploy immediately, wherever they’re needed.
Every situation is different, and the only way to know for sure which path nets you more, and which one actually fits your plans, is to run the numbers with someone who understands both the real estate side and the senior-specific considerations. This is exactly the kind of decision Melina walks her clients through before they commit to either direction.
None of this replaces advice from a licensed professional. The loan terms, tax consequences, and estate planning implications of each path are specific to your situation, and a reverse mortgage lender, CPA, or estate attorney should weigh in before you decide. Melina can point you toward trusted professionals in each of those areas if you need a referral.
Frequently Asked Questions
Can I get a reverse mortgage and still sell my home later?
Yes. A reverse mortgage does not prevent you from selling. When you sell, what’s owed, principal plus accrued interest and fees, is paid off from the proceeds, and you keep whatever equity remains. If the amount owed has grown close to or beyond the home’s value, the loan’s non-recourse feature protects you from owing the difference.
Is a reverse mortgage a bad idea?
Not inherently. It’s a poor fit if you plan to move within a few years, since the upfront costs take time to make sense, or if leaving maximum equity to heirs is your top priority. It can be a sound tool if you plan to stay long-term and want to access equity without a monthly payment.
How do I know if selling nets me more than a reverse mortgage would provide?
It depends on your home’s value, your age, current rates, and what you plan to do with the money afterward. A local market analysis paired with a look at current reverse mortgage terms is the only way to compare the two side by side for your specific home and goals. For the selling side, Melina’s breakdown of the hidden costs of selling your home in retirement is a useful starting point.
Do I need a lender or a real estate agent first?
Either conversation can start the process, but most retirees benefit from talking to both. Melina regularly coordinates with reverse mortgage specialists so her clients can compare the selling scenario against real, current loan terms before deciding.
If you’re weighing a reverse mortgage against selling and want to see what your San Diego home could actually net you, Melina offers a straightforward way to talk it through. You can schedule a consultation with her to walk through your specific numbers and figure out which path fits your plans.
