Summary
If you need cash and own your own home, there are a batch of alternatives to consider, each of which are discussed in other sections of this article:
- Mortgage refinancing
- Home Equity Loans and Lines Of Credit
- Reverse Mortgages
- Renting your residence
- Selling your home
- Sale-leaseback Arrangements
- Sale of your home subject to a Life Estate
Before using any of the alternatives:
- Consider the risks, tax implications, and effect on your lifestyle.
- Be sure to explore new uses of other assets such as life insurance, credit, retirement planning, and other assets before deciding which alternative is best for you.
- If you have a financial crunch, using your home for cash is just one of the many avenues to consider. See How To Deal With A Financial Crunch for other ideas.
- If you receive cash or decrease your monthly expenses by getting cash from the equity in your home, you could jeopardize your eligibility for public welfare benefits based on your financial need. For example, Medicaid, Supplemental Security Income (SSI), and food stamps. Medicare, Social Security Disability Insurance, retirement benefits, and private insurance benefits will not be affected.
NOTE: If keeping track of maintenance of your home is difficult, consider the following:
- Write a list of instructions which includes what needs to be done when.
- Use an online calendar such as www.calendar.google.com. You can set items to recur.
- If you have a smart phone, use an app such as Home Maintenance by Pojo Software.
Mortgage Refinancing
Summary
Mortgage refinancing is when you take out a new mortgage to replace your old one.
Refinancing can provide cash, lower your monthly payments and/or lower your overall costs.
When thinking about whether to refinance a mortgage:
- Compare what you're paying out-of-pocket to what you would pay if the rates are lower.
- Consider the closing costs and fees - though they may not be as important to you right now as compared to monthly payments - particularly if payment of the costs comes from the refinance proceeds. If you refinance with your current lender, some costs may be waived or reduced, such as for title insurance and appraisals. (Keep in mind that fees are negotiable.)
- Anticipate at least 45 days for a refinancing. If interest rates are low, there may be a lot of mortgage activity and the process could take even longer. Banks tend to process new home purchases before refinances.
If you decide to refinance, it is wise to shop around to find the best interest rate combined with the type of mortgage that is best for you. At least consider:
- interest rate
- Whether the rate is variable (adjustable)
- The length of the loan term.
For information about mortgage refinancing, see:
- Reasons To Refinance A Mortgage
- How Do I Qualify For Mortgage Refinancing?
- Pitfalls To Watch For When Refinancing A Mortgage
- Taxes And Mortgages
- Should I Refinance?
- Types Of Mortgages
- What To Do If You Decide To Refinance
- Veterans And Mortgages
NOTE: It would be helpful if the lender offers mortgage insurance with few or no health questions or can point you to a source for purchasing it on your own. Mortgage insurance pays off the loan in case you die.
More information about this subject is contained in the Main Article in "To Learn More."
To Learn More
Main Article
Mortgage Refinance 101Home Equity Loans And Lines Of Credit
Summary
A home equity loan is a loan secured by the equity in your house or apartment.
You can either take the proceeds as cash or use the loan as a line of credit to borrow money if and when you need it.
A particularly advantageous type of loan for a person with increased expenes due to a medical condition is one which only requires payment of interest for a period of time, with an interest rate after that period of time locked in.
To learn what you need to know about home equity loans, see be.ow..
CAUTION:
- If you take out a home-equity loan and are unable to make the required repayments, you could lose your home. This could be particularly problematic if the loan has a variable interest rate and the interest rate rises to the extent that you cannot make monthly payments.
- Read the below section about avoid fraud. For instance, be wary of shady brokers and "too good to be true" offers.
For information, see:
- What Are Home Equity Loans and Lines of Credit?
- How Do I Qualify For A Home Equity Loan Or Line Of Credit?
- How To Avoid Fraud When Seeking A Home Equity Loan Or Line Of Credit
- Taxes And Home Equity Loans
- Is A Home Equity Loan Right For Me?
- Tips To Consider If You Do Take A Home-Equity Loan Or Credit Line
- What To Do If You Can't Afford The Payments On A Home Equity Loan
More information about this subject is contained in the Main Article in "To Learn More."
To Learn More
Main Article
Home Equity Loans and Lines of Credit 101 (HELOC)Reverse Mortgages
With a reverse mortgage, you use the equity in your home to receive a monthly, tax-free, payment from the lender. Generally, repayment is not necessary until the owner sells the house or dies.
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Reverse MortgagesRenting All Or Part Of Your Home
You can rent all or part of your home, on either a long term or short term basis. A rental brings in cash, and companionship.
You can even turn your home into an assisted living facility if you need, or will need, assistance.
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Renting Your HomeSelling Your Home
While selling your home is not usually a way to get money from your house quickly, it may generate the most cash of all the alternative uses of your home.
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Selling Your HomeSale-leaseback Arrangements
A sale-leaseback is a legal arrangement where you sell your home to a buyer who then leases it back to you. You basically change your relationship to your home from owner to renter -- and get cash equal to your equity.
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Sale-Leaseback ArrangementsSale Of Your Home Subject To A Life Estate
A sale subject to a life estate lets you remain in your house for the rest of your life. You sell the house, but you have the right to live there as long as you live.
The terms under which you stay in the house are negotiable, though generally you have to maintain the house while you're in it.
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Sale Subject To A Life Estate