If you are retired or approaching retirement, you may find that a fixed income is not always enough to cover your expenses and maintain your desired lifestyle. Fortunately, there are other options to help you bring in extra money.

One option is getting a roommate. A home equity conversion mortgage (HECM), also known as a reverse mortgage, could help you get started.

Benefits of Home Sharing

According to Airbnb, an average host over age 60 earns about $6000 per year, and 83 percent of them say they use this money for either supplemental income or extra cash for things like vacation or holiday spending. Many senior hosts also say opening up their home has made them more physically active, mentally engaged, and socially connected than they would be otherwise.

How a Reverse Mortgage can Help

If you’re considering renting out a room in your home to travelers, a reverse mortgage could help you get started. These loans allow an individual over age 62 to turn their home equity into a one-time disbursement, monthly income or line of credit. Repayment can be deferred until you stop living in the home full-time. 

With the funds from your reverse mortgage, you could make home improvements — from refreshing the paint to remodeling a bathroom or kitchen, or even creating an entire suite specifically for rental purposes — that may attract more guests and add to your property value without dipping into your fixed income. 

Requirements to consider

If you decide to take this route, it’s important to keep in mind the requirements to keep your HECM eligibility. Namely, you must maintain the home as your primary residence; a reverse mortgage cannot be used for a separate rental income property. You also are responsible for paying your property taxes and maintaining valid homeowners insurance. You should contact your insurance agent to make sure your guests are covered under your current policy.

If you’re still unsure whether hosting is right for you, check out our previous blog, 5 Questions to Ask Before You Airbnb.

Whatever you decide, Open Mortgage origination specialists are here to help. Contact us today.

Things to know about Reverse Mortgages:

  • At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds
  • Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees
  • The loan balance grows over time and interest is charged on the outstanding balance
  • The borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home
  • Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment
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