Tapping the Equity in Your House
Tapping the Equity in Your House
For most people, their home is their biggest investment. Of course, when most people look at their house, they see it first as a place to live a life, maybe raise a family and fill with memories.
And that’s the problem when it comes to retirement planning: Emotions often get in the way when we think about whether and when to tap the often large sums of money we have tied up in our homes.
For people unwilling to sell, reverse mortgages and home-equity loans may be the answer. Reverse mortgages are a special type of loan taken against the equity built up in a house. Available only for those age 62 and older, reverse mortgages are growing in popularity because, unlike a home-equity loan, the loan becomes due only when the last owner moves, dies or sells the home.
However, reverse mortgages typically carry fees higher than a traditional home-equity loan. And a home-equity loan can be a better choice for people who want to pass the home to heirs. Both options have appeal for those who aren’t ready to sell.
Make sure you choose the right option for your circumstance if you’re considering a way to tap the equity you have in your current home. Talk to a mortgage expert or CPA for the best advice.
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