Home ownership is often overlooked when it comes to retirement savings, even though it represents a big part of many Americans’ financial picture. According to the U.S. Census Bureau, the nation’s homeownership rate was 64.2 percent as of the 2018 first quarter. With the median home value reaching $215,600 as of May 2018 according to Zillow, many American families actually do have the assets to help them get through retirement. The question is, how can you tap the money tied up in your home while still having a place to live?
There are at least three ways you can unlock the value of your home and use it as a retirement funding strategy:
Home equity loan
Home equity line of credit
Reverse mortgage
The first two options let you borrow against your home equity in exchange for paying interest, just like a normal loan. A reverse mortgage is a special type of loan that essentially pays out a portion of your home equity in cash and doesn’t require repayment until you sell your home. All of these options have benefits and drawbacks, but they do provide you with a source of funds if you have no other options when it comes to retirement savings.
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