Monetize You Home Equity

The video is here.

I the past few years homeowners experience amazing gains in their home equity. Many people happily sold their homes and moved to a new home using their equity to “upgrade” their digs. Some people moved out of state taking advantage of the difference in the home prices. But what if you don’t feel like moving is a good option for you?

You have several other options.

1.?????You can refinance getting a lower interest rate might lower your monthly payments and free up some cash you can enjoy for fun, investments, or other projects.

2.?????A cash-out refinance will give you a chunk of cash and a lower interest rate. You can invest cash on the stock market, fund a new business, buy a rental property, a second home….Hopefully, whatever you do with the money provides you with some cash flow to keep you comfortable with your new monthly payments.

3.?????Home Equity Line of Credit (HELOC) will give you access to cash when you need. HELOCs have lots of nuances the borrower should pay attention to. Make sure you consult with your loan officer, your financial adviser, or your CPA to make sure you understand and are aware of all the details.

These are great options, but what if you have lots of equity in your home, your mortgage payments are tiny or non-existent, and you don’t want to deal with mortgage payments?

Then you might want to consider the 4th option: reverse mortgage. Reverse mortgages are complex, have multiple options, and are therefore often misunderstood and misused, which gives them a negative reputation.

There are certain criteria you should meet to qualify for a reverse mortgage. And the borrowers must go through counseling. I will be talking about all these in later videos.

In a nutshell, with a reverse mortgage, the lender lends you money and you don’t have to pay it back. The interest is accrued and added to the principal of the loan amount. Once the borrowers move out of the house, the payment is due. The house could be sold or given to the lender. It depends on the circumstances, which we’ll discuss later.

For now, as an overview, you have options to monetize your home equity without selling your home: refinance, cash-out refinance, HELOC, or reverse mortgage. We will talk about all of them in future videos.

Please note, always consult a licensed professional before making any financial decision.

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