Homework for Boomers Thinking of Tapping their Home Equity

Baby boomer home equity loans

I’m a Baby Boomer who is thinking of using my home equity to clear up expenses for a rental renovation and other debt. Ideally, I’d like to accomplish this without incurring major fees, endangering my home ownership or preventing future access to my remaining home equity.

Research Articles for Boomers

So, I did some online homework. In gathering information, I reviewed a cross-section of recent articles that seemed right for my situation:

So Many Choices – What Works for You?

Yes, I read every one of the above articles and learned a lot. Mainly, I learned that there are a lot of choices and the key is to pick the best one that fits your situation and matches your long-term goals. There is no one answer for everybody.

Considerations include how much equity you have, your ability to repay a loan, how you want to use the funds, your age, tax implications and inheritance goals.

The leading choices for older Boomers seem to be cash-out refinances, home equity loans that work like credit cards (HELOC), and reverse mortgages.

Reverse Mortgages Make Sense for Many

Reverse mortgages have often received bad press, but they have their place. Recent laws provide more protection for borrowers under this plan.

One of my friends who is in his late 70’s plans to sell his fully-paid-off home, use the after-tax proceeds to supplement living expenses, and then purchase a new home using a reverse mortgage, which means no monthly payments. There’s pros and cons to this scenario, but it works for him.

Another couple I know do not have any kids, so there’s no concern about leaving an inheritance. They just want more spending money during retirement without touching their other investments. A reverse mortgage seems to make sense for them too.

The Bottom Line for Baby Boomers

I still haven’t settled on the best choice for myself. The good news is that there are so many choices and there’s bound to be one that works best for me. Do your homework – There’s an answer for your situation too.

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