Home equity loans could help retirees with unexpected expenses, supplemental income and more.
Home equity is, as Steve Azoury, ChFC® and owner of Azoury Financial in Troy, Michigan, puts it, 'the paid off portion of your home,' or the portion of your home that you own. Since it's something you own, it's something you can use. Many borrow against their home's equity as 'it normally costs less to use with the house being the collateral for the loan,' Azoury says. But retirees have things to consider before they tap into their home's equity.
'Equity loan can be used to supplement retirement income and the loan would be paid off when the house is sold,' Azoury says.You may have a substantial amount of equity in your home. If that's the case, and you're not worried about paying your home off throughout your retirement, you could use that equity to help make your golden years more comfortable. To pay off high-interest debtHigh-interest debt like credit cards and personal loans are often a major hurdle in retirement.