Home Refinance

Four Ways to Use Your Home Equity for Retirement Income

If you own a house, you can use its equity to improve your retirement income. This article summarizes 4 ways to generate income from your home’s equity.

If you’re scrambling to increase your savings for retirement income, you can put your home’s equity to work for you. You can:

1. Buy down to free up equity to apply to your savings

2. Rent out part of it for income

3. Use it to buy a 2-family to rent out one unit and live in the other

4. Reverse mortgage it for income

*Buy down to free up equity:

With the kids gone, you probably don’t need all the house you have. You can sell it to free up equity you built-up over the years. Of course you’ll still need a place to live, and living in your own house is generally the cheapest way to live if you don’t have a mortgage on it.

Buying down means you’ll sell your house and buy a smaller, substantially less expensive house. If you sold your home for $300,000, you could search for a condo for -say $125,000. Be sure to find one with the amenities you want and with expenses that are easily handled.

Doing so would free up $175,000 of equity. You can add that to your savings for more income. Withdrawing at a safe 4% per year would increase your annual retirement income by $7,000.

*Rent out part of you home for income:

Again, if you don’t need all that house, but want to remain living in it, why not rent out part of it for income. You may want to rehab it so that you have an ‘in-law’ arrangement that includes a separate kitchen and bathroom – and a separate entrance.

The money you spend rehabbing the house would, in large part, increase the house’s value. But you should be able to recover your costs and generate a net positive income from renting it out.

*Buy a 2-family, live in one unit and rent out the other:

Don’t want to rehab? Sell your home and buy a 2-family. Put most, or all, of your freed-up equity into the 2-family then move into one unit and rent out the other.

Some people are bothered by the concept of renting out their property. Don’t be. Just use an agency to find well-qualified renters for you – or, do it yourself. Most people are decent and pay their rents.

While you own your property, its value will keep increasing over the years – as it always has. With little or no mortgage you should easily be able to maintain it through hard times.

*Reverse mortgage your house for income:

A reverse mortgage allows people who are 62 or older to borrow against their home equity. But unlike traditional home mortgages, no payment is due on a reverse mortgage until the homeowner moves, sells or dies.

If the home is sold, any equity that remains after the reverse loan is repaid is then distributed to the borrower or the borrower’s estate. And the loan repayment amount can’t exceed the value of the home.

A reverse mortgages can help a retiree use his home equity for income, to pay bills, and more, while remaining in his home.

Reverse mortgages have many of the same costs as a home purchase loan or refinancing a conventional mortgage. So, you’ll pay an origination fee, up-front mortgage insurance premium (for the FHA Home Equity Conversion Mortgage or HECM), an appraisal fee, and certain other standard closing costs. Usually, these costs are capped and can be financed as part of the reverse mortgage loan.

A reverse mortgage seems ideal for an older person who needs income but wants to stay in his or her home. But unless housing prices are growing fast each year, your reverse mortgage loan will most likely eat up all equity in your home and leave nothing to your children.

Home Equity Loans – 3 Tips to Smarter Borrowing

There is no question that home equity loans have become the biggest tool for homeowners to get their hands on the cash they need. And used correctly, these loans are also a smart way to borrow needed funds for things like medical expenses, debt repayment and home improvements. With that said, here are 3 tips to help you in finding a great deal on a home equity loan.

1. Shop For Rates And Avoid Fees

Many home owners don’t realize that lending rates on loans are different. They mistakenly believe that all lenders will loan money at about the same interest rate. Nothing could be further from the truth.

Home equity loan rates could vary by up to 5% in some cases, and on a $100,000 loan that is serious money. Get at least 3 different loan comparisons before making a decision. Yes, that may take extra time, but it could be worth thousands of dollars. Thousands of dollars of your money.

Also, be aware of loan fees. Lenders should not be charging you for an application fee or an appraisal fee. Nor should they add fees into the loan amount. Where a lender may add on a fee is with a home equity line of credit. They may charge an annual fee.

2. Understand Tax Rules

Many borrowers mistakenly believe that interest on any home equity loan will be tax deductible each year. This just is not true.

Interest on loans up to $100,000 may be tax deductible, but any amount over that will not be deductible.

Also, in order to deduct the interest you will have to be able to itemize your tax return. Will you have the deductions to be able to do this?

3. Understand Your Home Is On The Line

Not only are you putting your home on the line in the event you are unable to repay your loan, but you are also sucking out your home’s equity. Be sure that you are not planning on moving in the next few years or you could be in financial trouble.

Be careful in using the money for home improvements. Ask yourself if you will be able to get the value back out of your home when you go to sell it. In some cases the answer may be no.

By following these tips you can make a smarter decision in taking out any type of home equity loan.

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Anything bad about a FHA home Loan?

Looking to purchase a home with as little money as possible down. It will be under 200K, and in an area considered depreciating so 100% financing is out of the question. Is there anything bad about a FHA loan? If i wanted to sell the house or do a home equity loan would this constrict my options?

Home Equity Loan Rates Free Significant Info

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The changes on FHA loans and how they will affect borrowers and sellers

The changes on FHA loans and how they will affect borrowers and sellers
Seller concessions What are they? Contributions that sellers kick in to help defray a buyer’s costs. They can include closing costs, inspections, appraisals and free upgrades. What’s changing? The FHA proposes slashing allowable seller concessions in half, capping them at 3 percent of the home pr… Federal Housing Administration – Business – United States – Mortgage – Financial Services

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I have a home equity loan I want to ditch. Can I use an FHA loan to refinance both my mortgages?

Depending on what the appraisal comes back at, I might be really close to owing as much as it’s worth. Can an FHA mortgage be used for this?
I’m looking for more information on how FHA loans work. Can I use FHA to refinance? If so, are there any limits on how much I can borrow against my house? Is FHA a pain in the rear to process?

Forget I said anything about equity for now. I just want to know if this is doable.

FHA Home Refinance – Should You Do FHA Mortgage Refinancing?

FHA Home Refinance may be one of the best options available to you if you want to refinance your home.  It can be quick and easy and also save you money on your refinancing costs.

You may be in a position that you want or have to refinance the mortgage loan on your home.  There are a lot of options available to you if you have good credit scores and a few options if your credit scores are less than perfect.  One of the best options for you either way is a FHA Home Refinance.     

There are usually three reasons that people are looking to refinance their home.

1.  First, they may have a loan that is currently on an ARM, which is a loan with an adjustable rate, and they want to get a fixed rate.

2.  Second, they could just want to try to lower their interest rate on their existing mortgage.

3.  Third, they could want to consolidate some debt by refinancing.

If you are one of these people, then you may want to look into an FHA Home Refinance. FHA Mortgage Refinancing is one of the best ways to get a loan. They have a lot of incentives that could interest any home owner.  

One of the main reasons why people look into FHA Home Refinance is that they can refinance up to 97.75% of their homes current value. With this high of a refinance value you could easily consolidate all of your high interest debt into your home loan and save thousands of dollars.

Another reason why FHA has a good refinance program is that if people want to try a cash out loan, they can refinance up to 85% of their homes value. This is an amazing opportunity for people looking to lower their debt and consolidate.

Another benefit of FHA Mortgage Refinancing is that if you already have an FHA loan you can refinance with what they call a FHA Streamline Refinance Loan. The benefits of this type of FHA loan are that they are very flexible when it comes to credit ratings and they also don’t necessarily have to have an appraisal. This is the perfect type of loan that could help you lower your mortgage payment. With dropping values in homes, this type of loan could be very worth while. Many online companies will let you fill out the paperwork via email and they may even have online signing.

You can get more information on FHA Streamline Refinance Loan by clicking on the links at the bottom of this article

You can get a lower interest rate, consolidate, or just lower your mortgage payments by refinancing with FHA. Many companies have pretty much eliminated most of the problems you may run into when refinancing.

With people trying harder to get out of debt and lower their bills, an FHA Mortgage Refinancing is the perfect answer.  Also the government has made it easier than ever before for people to get an FHA loan. If you currently have an FHA loan and you want to refinance, now is the best time to do FHA Home Refinance to get the very best interest rates available.

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