For boomers, this is a great time to consider taking out a home equity loan (HEL) or home equity line of credit (HELOC).
Every day, about 10,000 baby boomers turn 65, the “traditional” age for retirement – or at least, the age when many people decide to call it quits and leave their jobs. In years past, many retirees could count on a workplace pension combined with Social Security benefits and personal savings to help them afford their retirement as long as they had modest financial needs.
But today, that's all changed; Social Security has not been keeping pace with withdrawal demands and inflation, the lion's share of businesses no longer offer employee pensions, and the stock market volatility of a few years ago all but wiped out the personal retirement savings of millions of men and women nearing or already at retirement age. Add to that the longer life expectancy for both men and women and it's easy to see why so many men and women are worried about having enough money to afford to live during their retirement years. In fact, numerous studies have shown just how woefully unprepared most people are when they reach their retirement years with the average retirement savings hovering well under $100,000. What is a retiree to do?
By the time retirement has arrived, most men and women have built up considerable equity in their homes – equity that can provide a much-needed financial cushion and extra peace of mind. Although home equity is one commodity shared by the majority of baby boomers, it's often overlooked as a source of funds for retirees. At least part of that is due to the fact that home equity loans are most commonly marketed as loans for life expenses like weddings, college education or home improvements, and not viewed as traditional vehicles for helping to offset some of the expenses of retirement. That view has begun to change more recently as older Americans are more commonly including their home's equity in their retirement planning.
If you have equity in your home, there are two primary ways to unlock it: Consider downsizing to a smaller home now that your children are grown and on their own, or take out a home equity loan (HEL) or home equity line of credit (HELOC). Downsizing can free up cash when you sell your current home and purchase a less expensive home in return. But a recent survey by AARP found most retirees – about 90 percent of those surveyed – don't care to downsize; they want to remain in their homes as they get older, which makes home equity loans an especially attractive option. The primary difference between the two options is how the money is disbursed. A HEL gives you your money in a lump sum while a HELOC lets you draw from a line of credit as you need it. Not only can a HEL or HELOC help you handle the costs of retirement, it can also help fund improvements and modifications to your home that allow you to stay put as you get older.
Is a HEL or HELOC right for you?
If you're retired or you're planning on retiring soon, now is a great time to explore home equity loans.
Rates remain near historic lows, which means this is the ideal time to lock in a great rate. You've invested a lot in your home. Take a few moments right now to review our rate tables to compare all your options and see just how easy it can be for your home to start paying you back for a change.
: BestCashCow's Editorial Board has been led by Ari Socolow since 2008.
Conditions… Variable APR of Prime minus 1.01% in all states. Min loan amount $10,000. Max loan amount $200,000. 30-year term. Annual fee waived for the first year. See conditions for guarantee at thirdfederal.com.
Third Federal rate are typically 20% lower than other leaders
Guaranteed Lowest Rate
No closing costs, prepayment penalties, or minimum draw requirements
Available APRs range from 6.60% - 14.15*, which includes the payment of a higher origination fee in exchange for a reduced interest rate, which is not available to all applicants or in all states.(the advertised APR includes a combined 0.25% discount for opting into a credit union membership (0%) and enrolling in autopay (0.25%) as well as payment of higher origination fee in exchange for a reduced rate, which is not available to all applicants or in all states). The lowest APRs are only available to the most qualified applicants, depending on credit profile and the state where the property is located, and those who also select five year loan terms; APRs will be higher for other applicants and those who select longer loan terms. Rates change frequently so your exact APR will depend on the date you apply. APRs for home equity lines of credit do not include costs other than interest. You will be responsible for an origination fee of up to 4.99% of your initial draw, depending on the state in which your property is located and your credit profile. You may also be responsible for paying the costs of valuation if an AVM is not available for your property ($180), manual notarization if your county doesn’t permit eNotary ($380), and recording fees ($0 - $315) and recording taxes, which vary by state and county ($0-$1,400 per one hundred thousand dollars borrowed). Property insurance is required as a condition of the loan and flood insurance may be required if your property is located in a flood zone.
Flexible terms, borrow $15K-$400K, redraw up to 100%
Use to consolidate debt or finance your next home project
1. APRs for initial advances range from 6.3% to 18.00% based on funded HELOCs as of September 2024. Your actual rate will depend on many factors such as your credit history, loan-to-value ratio, line amount, loan term, lien position, and property state. The lowest rates are only available to the most qualified applicants. The APR is variable, but the APR that will apply to each draw will be fixed on the date the draw is made.
2. As of October 2024, 10% of funded HELOCs achieved a closing timeline of 6 days or less and a funding timeline of 10 days or less. This timeline assumes consumers close with our remote online notary, provide supporting documentation promptly, and ensure the information provided is accurate and consistent with our verification process. Delays, discrepancies, and other unforeseen factors may impact the closing timeline. MBA’s 2024 Home Lending Study reports an average industry closing time of 31 days.
3. A Home Equity Line of Credit has a variable rate. The APR may change, but the APR that will apply to each draw will be fixed on the date the draw is made. Your APR will be the Prime Rate at the time of draw plus a margin fixed for the life of the HELOC.
As low as 6.3% APR on your initial draw*
Get your money up to 6x faster than the industry standard*
Pointʼs Home Equity Investment (HEI) is an entirely new way to unlock your homeʼs wealth. Point partners with and invests alongside the homeowner in the property. Subject to underwriting approval, Point will pay you an upfront, lump sum amount in exchange for a portion of your home’s future appreciation. Future appreciation is based on using the risk adjusted Appreciation Starting Value and calculating any gain or loss based on the final appraised value of your home at the time of exit. Point charges up to a 3.9% processing fee (subject to a $2,000 minimum) and other third party paid closing costs such as appraisal, escrow, and government fees. The term is 30 years. Point will place a lien on your home to secure performance of the underlying agreement. There are no monthly payments or interest accrual. Homeowner’s repayment amount is based on the future value of the subject property at the time of exit, as outlined in the underlying agreement.
No income requirements or need for perfect credit
Your home wealth, to use your way
Find out if you qualify in as little as 60 seconds
Home Equity Investments are not considered a loan in all states
• Home Equity Loans & Refinance – Cash out
• Customized rate quote with no impact to credit
• Low Rates, Quick Approvals, Wide Range of Products
• Over 100 Billion Funded. 22 Years in Business
Home Equity Loans & Refinance – Cash out
Customized rate quote with no impact to credit
Low Rates, Quick Approvals, Wide Range of Products
The Figure Home Equity Line is an open-end product where the full loan amount (minus the origination fee) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw.
Fastest way to turn home equity into cash
Flexible terms, redraw up to 100%, borrow $15k-$400k
Approval in as little as 5 minutes. Funding in as few as 5 days.
Use to consolidate debt or finance your next home project
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