3 ways Social Security recipients can access home equity now
Summary
Many retirees who receive Social Security benefits have built up home equity, which is the value of their home minus what they owe on it. There are three main ways they can access this money: reverse mortgages, home equity loans, and other borrowing options, each with different rules and costs.Key Facts
- Social Security benefits often provide a fixed income that may not cover all big expenses retirees face.
- Many older Americans have significant home equity due to rising home prices and paying off their mortgages.
- A reverse mortgage lets homeowners get cash without monthly payments, but interest grows over time and reduces the home's remaining value.
- Home equity loans give a lump sum with fixed monthly payments and interest rates, requiring borrowers to qualify based on income.
- Both options use the home as collateral, meaning the home’s equity is affected and must be repaid eventually.
- Borrowers still need to pay property taxes, insurance, and upkeep costs when using home equity.
- It's important for retirees to understand these options to choose one that fits their financial needs and comfort level.
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