No Income? No Problem with Home Equity

Are you familiar with the term “home equity”?  If you are retired or thinking of retiring soon, then understanding what home equity can do for you is important.  One of the weightiest considerations for retirees is whether or not you can afford to continue living in your current home.  If you own or co-own that home, then home equity is something you might want to consider.

 

At its most basic, home equity allows you as a homeowner to take out a loan against your home that you do not have to repay until the house is sold, you die or the last surviving owner takes a new permanent residence.  Any costs incurred in obtaining the loan are simply added to the loan, as are all interest payments.   Home equity can be leveraged for a loan in different forms.  You can request one large sum, monthly payments, a line of credit or some combination of the three.

 

To utilize home equity to obtain a loan you must be 62 or older.  Unlike a standard mortgage, you can be completely without an income and lenders will not blink.  You will never have to be able to afford a costly monthly payment.  The debt does not have to be settled until the house sells or your estate is settled.   Generally, a loan attained through home equity must be the first mortgage against your home, although some lenders allow you to use the cash received for home equity to pay off an existing mortgage.  How much you can receive in a home equity determined loan is largely dictated by two factors: your age and the value of your home.  The older you are and the more your home is worth, the more cash you can get with a home equity option.

 

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