Need advice - too many options

[Garrett Binder]

I'm writing this for my Mom and I'm looking for some unbiased advice here as I don't know too many people yet in the RE investing game. Here's the situation. 

She is 71 years old, owns a home in San Diego that can probably sell for at least $1.5M right now in this market. She owes about $371k on it.  It's a 6BR house and while she has 2 roommates, it's still pretty big for her and doesn't really need it anymore. Her goal is to live in San Diego for at least the next 5 years while she continues to work, retire comfortably and if possible, create some passive income on the side although safety and security are much more important at this point due to her not having much else saved up and few working years left. 

Without sharing some of the advice I've already received, I'd like to know what the best options for her would be.  Here are several as I see them in no particular order.

- Sell now, downsize and live mortgage free and invest the difference or buy a rental property

- Rent out her home (she estimates she can get around $6500/mo for it) and rent somewhere else temporarily. 

- Refi and get an interest only loan, pull out about $300k in equity from her home and buy a rental property

I'm sure there are tons more options and lots of variations here on how to do it.  I think being financially secure and the least risk is paramount as her house is her biggest asset and can't afford to lose it. Thank you all for reading and I'm eager to hear the feedback/advice.

Thanks!