For most people who are 60 years old and above, money from their pension is not enough. While there are seniors that work even though they are beyond 60 years old, for seniors who have equity in their homes, they have an option in home equity loans for seniors.
In this article, we are going to talk more about home equity loans for seniors. This type of loan is special in that the borrower can opt to defer payment. As a matter of fact, as long as the senior is living in that house, he or she is not required to make payments at all.
Do you have equity in your home? Are you a senior citizen that needs a huge sum of money or otherwise needs money just to supplement your income? If the answer to both questions is a yes, you should get an equity loan on your home.
This type of loan is easily made available by banks that offer them. What makes this type of home equity loan different from the others is the fact that it is protected by the government. What I mean is that lenders are required to maintain a no-negative equity guarantee, which ensures that the borrowing senior citizen will not owe more than the value of his or her home.
Now, this no-negative equity guarantee might make you think that the loan amounts available for seniors are small, however, the opposite is true. You can get a substantial amount. How substantial are we talking about here? That really depends on your age. If you’re over 60 years old but not yet 85, you can get 10%. However, once you reach 85, you can get up to 35% of the value of your home. So, if your house is worth $350,000, you can get $35,000 off it if you’re sixty, and $122,500 if you’re 85.
Should you take out a home equity loan at this stage in your life? That is a good question. While it is true that the repayment of the loan is deferred, this is still a loan that still needs to be repaid. Also, different lenders offer different interest rates and terms on their loan products. This is the reason why you need to inquire about the different loans offered by the different banks. Lenders, while they offer more or less the same thing, differ in the details and you will want to use those details to your advantage.
Even if you happen to be desperate for money, you should not rush to get a loan. Doing so is the easiest way for you to drown in debt. And that is not something you want to happen if you’re already in your golden years. Being in retirement and being able to enjoy the equity on your home should be a well thought-out process.