Often times Seniors develop needs to create cash. My research and life experiences indicates that seniors have generally three types of cash needs. One such could be classified as “to enjoy our Senior years”. We often choose to travel, step up our level of lifestyle, our toys, vacations, second homes and the like.
A 2nd need for ready cash would be for those unexpected expenses, which could be for health or accident issues for ourselves or our families. Our extended families can also need our financial help for their own sudden and similar needs or grandchildren’s college expenses and the list is endless.
A third classification created by my life observations is simply on a must have or needs basis to maintain our current life style. This can be created by the loss of a spouse, early retirement due to other than our choice, such as health, injury or similar forced causes.
Sometimes we, by our nature, just want to have the flexibility of having cash on hand or the ability to create cash, if the situation or need should present itself. After all, we have worked nearly all of our adult life and we have earned this right, at least that’s my opinion and view. It really doesn’t matter what the reason is for our need, if we have a need, that is our personal business.
One terrific saving grace again is our home or more so the home equity that we have created, by paying off most or even all of our home mortgages. I am often asked by Seniors if at our age, is it possible to get a home equity loan. The answer is a very loud yes!
There are a variety of programs available for the Senior to create cash or even a steady monthly income, from our homes’ equity. There is for example the “Home Equity Loan” for an amount up to actually 100% of your home’s appraised value. While some programs may limit the length of the loan based on our age, there is really no limit here, except the value of our equity in our home. A note of caution here is to remember that there will be monthly payments to make, each and every month. However the controlling factor is simply our home’s equity value.
Another type of home equity loan can be obtained by Seniors and others, based upon their homes’ equity. In an “Equity Credit Loan” you do not receive cash at the time. You do receive approval for a loan amount that you do not access, until you need it. In a sense, it is like a checking account and in fact, you are often given a checkbook from which you can write checks of any amount, up to the maximum limit of your approval.
I have personal experience with this type of equity loan and have found it to be great for my needs. If you do not use it, there are no payments. If you do write checks on it, then you have monthly payments.
Another type of loan that is getting increasingly popular with Seniors, is the “Reverse Mortgage”. With this type of mortgage, you receive a set monthly payment amount from the mortgage company, to use as you see fit. You receive this same amount up to the maximum agreed upon equity of your home. You never have to pay back the monthly payments, as they are actually from the equity of your home. As part of the agreement that you signed eventually the loan will be paid off, when the home is sold or even refinanced. So if you choose not to repay the loan, your home eventually will, even if your heirs handle it. If done with a legitament mortgage company it is a good, safe option for the Senior. You will not be forced to move out of your home nor to sell it before you wish. You do need to determine how the monthly income will affect your social security, Medicaid or Supplimental Security Income.
I intend to address the Reverse Mortgage in more detail with another writing soon. Meanwhile before you sign, please consult with your Attorney, your family and carefully research reverse mortgages. Check out: http://www.aarp.org/revmort or call 800-209-8085
http://www.fanniemae.com
http://www.financialfreedom.com
http://www.reversemortgages.org
