Connect with us

CBS News

The best ways to use home equity to fund retirement, according to experts

Avatar

Published

on


Senior Couple Sitting On Sofa At Home Using Laptop To Shop Online
There are a few good ways to tap into your home’s equity to fund retirement, experts say.

Getty Images/iStockphoto


Over the past few years, home equity levels have increased substantially nationwide. In fact, as of the first quarter of 2024, the average homeowner had seen their equity increase by $28,000 year-over-year, according data from CoreLogic. That uptick in home equity began in 2020 and was driven, in large part, by a mix of low rates, low for-sale home inventory and high demand by buyers. Since then, the average price of a home has increased over 50% — climbing from an average of $317,000 in the second quarter of 2020 to $480,000 in the first quarter of 2024.

That has left the average homeowner with about $300,000 in home equity. And, that equity can be borrowed against, typically at a low rate, for a wide range of uses — including debt consolidation and home renovations or repairs. Borrowers also have a few different home equity lending options to choose from, including home equity loans and home equity lines of credit (HELOCs)

While home renovations or consolidating debt can be smart ways to use your equity, so can using it to help fund your retirement. For example, you could tap into your equity to help cover retirement expenses, such as unexpected medical bills. But what is the best way to use home equity to fund your retirement — and what are some of the pros and cons of each option? Here’s what to know.

Ready to tap into your home’s equity? Compare your best borrowing options here.

The best ways to use home equity to fund retirement

Here are some of the best options you have if you want to use your home equity to fund retirement.

Opt for a home equity loan or HELOC

A home equity loan could provide a lump sum of cash that you can use to cover retirement expenses. Or, you could tap your home’s  equity via a HELOC, which works as a line of credit that you can borrow from as necessary during the draw period.

However, it’s important to consider the potential drawbacks of each option. For instance, though home equity loans and HELOCs often have lower interest rates than other products, like credit cards and personal loans, it might be tough to repay the loan, including interest, especially if you’re on a fixed income. 

As a result, it might be best to use these funding options as a short-term solution.

“Using a home equity loan or line of credit to fund your retirement is not sustainable over a long period,” says Stephen Kates, CFP and principal financial analyst at Annuity.org. 

Kates says that while it’s common to use these borrowing options for home renovations and repairs or unexpected expenses, the downside is that they don’t produce a continuous and sustainable income source like some other home equity products. 

Find out more about the home equity borrowing rates you could qualify for here.

Consider a reverse mortgage to boost income

A reverse mortgage may be the best option if your goal is to boost your cash flow. Unlike a home equity loan or HELOC, a reverse mortgage doesn’t require you to repay the loan with monthly payments. Rather, you repay the loan with interest when you sell your home or die.

In turn, this option is often best for those who don’t have children or heirs they want to leave their home to, says Gloria Cisneros, a certified financial planner at wealth management firm LourdMurray. Or, it could make sense to use a reverse mortgage if you have other assets set aside for your heirs, according to Cisneros.

However, if your need for funds is temporary and you expect additional cash to come in soon, taking out a reverse mortgage to fund retirement might not make sense, Cisneros says. In this scenario, taking out a HELOC or home equity loan could be a better solution.

Your home also needs to be paid off or have a low balance to qualify for a reverse mortgage, Cisneros adds. In addition, you generally have to be at least 62 years old, though some lenders have lower minimum age requirements for non-government-insured reverse mortgages.

You should also consider whether you can afford the upkeep of your current home if you’re going to use a reverse mortgage loan. After all, one of the requirements of a reverse mortgage is that the homeowners continue to pay property taxes and insurance and keep the property in good condition. 

Downsize to turn your equity into cash without borrowing

Because of the risks of taking out a loan to fund your retirement, Michael Collins, CFA and founder of wealth management firm WinCap Financial, recommends downsizing as an alternative solution.

“If your current home is larger than you need in retirement, selling it and downsizing could provide you with extra cash to fund retirement expenses without taking out a loan,” says Collins.

This could be the best option to fund retirement, experts say, especially if you can purchase a smaller home in cash. 

After all, in this scenario, you could avoid paying interest at today’s higher rates, says Donald LaGrange, CFP and wealth advisor at Murphy & Sylvest Wealth Management.

Another option for downsizing is selling your home and moving to a retirement community. LaGrange says these communities are often all-inclusive, so it’s possible in some cases to save money by taking advantage of all of the amenities offered. Common amenities include entertainment, housekeeping and private dining and laundry service.

Other alternatives for funding retirement

Before you take out a loan to fund retirement, be sure to consider all of your options — including those outside of borrowing from your home. For example, you could consider returning to part- or full-time work, says Kates. Getting a job can supplement your income and reduce the need for loans or withdrawals from your savings, Collins says.

In addition, you may want to look into government programs like Social Security and Medicare, Collins says, as they can provide certain types of financial support during retirement.

The bottom line

Taking out a home equity loan or HELOC to fund retirement could be beneficial as a short-term solution. That said, experts warn that it only makes sense if you can comfortably afford to repay the loan, as defaulting has negative consequences like a lender foreclosing on your home. Ultimately, though, the best way to use home equity to fund retirement depends on your financial situation and goals. Experts say offering specific guidance can be challenging because each situation may be different. As a result, it’s typically best to contact a financial advisor so they can review your complete financial picture before making a recommendation.



Read the original article

Leave your vote

Continue Reading

CBS News

GOP Rep. French Hill says it’s up to House Ethics Committee to decide on releasing Gaetz report

Avatar

Published

on


GOP Rep. French Hill says it’s up to House Ethics Committee to decide on releasing Gaetz report – CBS News


Watch CBS News



Rep. French Hill, Republican of Arkansas, tells “Face the Nation with Margaret Brennan” that “the decision is theirs” about whether the House Ethics Committee should release their report on former Rep. Matt Gaetz, who resigned last week after being selected by President-elect Donald Trump to be Attorney General.

Be the first to know

Get browser notifications for breaking news, live events, and exclusive reporting.




Read the original article

Leave your vote

Continue Reading

CBS News

Calvin Klein model charged with murder in stabbing death in New York City

Avatar

Published

on


NYPD reports drop in overall crime, but uptick in hate crimes


NYPD reports drop in overall crime, but uptick in hate crimes

02:51

A model who has appeared in campaigns for Calvin Klein and Levi’s has been formally charged in the stabbing death of a man in New York City, prosecutors said Saturday.

Dynus Saxon was arraigned in Bronx criminal court late Friday in connection with the Nov. 10 killing of Kadeem Grant, according to Bronx District Attorney Darcel Clark’s office.

Police say they found the 35-year-old victim stabbed in the chest in an apartment in the New York City borough of the Bronx.

They haven’t disclosed a motive or any other details surrounding the incident other than to say that Grant was pronounced dead at the scene and that a knife was recovered. The knife was discovered near the victim’s body and a trail of blood was seen on the front steps of apartment building, the New York Post reported.

US-NEWS-MALE-MODEL-STABBING-NY
Male model Dynus Saxon was arraigned in Bronx Criminal Court on Nov. 15, 2024, for a stabbing murder. 

Kerry Burke/New York Daily News/Tribune News Service via Getty Images


Saxon was arrested Monday on charges of murder, manslaughter and criminal possession of a weapon.

At his arraignment Friday, the 20-year-old resident of Manhattan’s East Harlem neighborhood was held without bail until his next court date on Dec. 3, Clark’s office said.

Saxon, who has also appeared in fashion publications such as Vogue Italia and L’Officiel Baltic, didn’t speak during the proceedings, the Daily News reported.

Prosecutors said he had a large bandage over his right hand because of an injury he sustained while repeatedly jamming the knife into Grant’s chest, the newspaper said.

Grant’s father, Christopher Grant, told the Daily News that his son cared for his young daughter and his grandmother.

“He was just a loving kid who was there for his family and his daughter. It’s just so sad that she has to grow up without a father,” Christopher Grant told the Daily News.

Bronx Defenders, a public defender nonprofit representing Saxon, didn’t immediately respond to an email seeking comment Saturday.

Saxon’s Instagram profile, which has since been made private, featured photos of his modelling work, as well as attending red carpet events, including the New York premiere of the Marvel film “Deadpool & Wolverine” this summer.



Read the original article

Leave your vote

Continue Reading

CBS News

Transcript: Rep. French Hill on “Face the Nation with Margaret Brennan,” Nov. 17, 2024

Avatar

Published

on


The following is a transcript of an interview with Rep. French Hill, Republican of Arkansas, on “Face the Nation with Margaret Brennan” that aired on Nov. 17, 2024.


MARGARET BRENNAN: And we are joined now by Republican Congressman French Hill. He joins us from his district in Little Rock. Good morning to you, Congressman.

REP. FRENCH HILL: Good morning, Margaret. Thanks for having me. 

MARGARET BRENNAN: Glad to have you here. You served with Congressman Gaetz. You heard the Speaker who has said, while he doesn’t want to specifically wade in to the ethics matter, he also thinks it would set a bad precedent to release a report on a former member. Do you think the Ethics Committee should make that decision for itself?

REP. HILL: Well, I think the Ethics Committee does make that decision for itself, but I think Speaker Johnson makes a important point, which is, Mr. Gaetz has resigned from Congress. There are many investigations that the House Ethics Committee has done, and we don’t want to set a precedent where we, under any circumstances, will release documents from that committee, but that decision is theirs. Speaker Johnson has made his views known, and now it will be up to the Senate to conduct their advise and consent confirmation process. 

MARGARET BRENNAN: You know, CBS News reported back in June that four women informed that committee they were paid to go to sex and drug fueled parties with Mr. Gaetz. Also the Ethics Committee has Venmo transactions showing Gaetz’s payments for the women, since taxpayers paid money for this report to be conducted and it was done, do you think if you were a Senate you would consider this material information to confirming the top lawmaker for the United States of America- law enforcement officer, I should say? 

REP. HILL: I don’t, I don’t have, I don’t, I don’t personally know any details about the ethics investigation or the allegations, because I haven’t, don’t serve on that committee. But your point is, would the Senate Judiciary Committee asked to see that report, and that may well be a decision that they take, and the ethics committee has a decision that they have to make, and Mike Johnson’s expressed his view on on that as well. So as I say, this is an important process that the Senate has to do, advise and consent for all the nominations, and President Trump has the prerogative to nominate the people that he thinks can best lead the change that he believes the American people are seeking in each of the agencies of the federal government. 

MARGARET BRENNAN: You have spoken to us before here on “Face The Nation” about your work around Syria and Bashar Al Assad’s oppressive regime there. You actually visited northern Syria, an area that he wasn’t in control of, back in 2017. The first lawmaker since John McCain to do so. Congresswoman Tulsi Gabbard, when she was in office, went to Syria and met with Mr. Assad himself, then publicly, she came out and questioned U.S. intelligence assessments of his chemical weapons attacks that were carried out on civilian areas, not just once, multiple times. These were high confidence assessments by the intelligence community. Would you feel comfortable with her at the helm of all 18 of them?

REP. HILL: Well, I served on the House Intelligence Committee during this past Congress, and I know the important job that the DNI performs in coordinating, collecting and reporting on our intelligence. And I think should Tulsi Gabbard be confirmed, she would know with high confidence as to precisely how we collect intelligence, how we coordinate and collaborate on it, and how we then report it to the President of the United States and to the two intelligence committees. So again, this is an important assessment for the Senate to make, but I remind you Margaret, Donald Trump won the election. He wants people that he has a good relationship with, that he trusts, that he believes can do a good job in the agencies to send the message that we want change in Washington. And the Senate, too, has their important job, and we’re going to have to wait and see how the Senate handles each of these confirmations. 

MARGARET BRENNAN: So it was John McCain who went in 2017, you went in 2023 I may have misspoken there on the year, but so, you believe the US intelligence community conclusions, though? You don’t mean to question those?

REP. HILL: No, I don’t.

MARGARET BRENNAN: Okay.

REP. HILL: I’m simply saying, as a member of the committee, I don’t question that public assessment that’s been made in the public domain over many, many years, and I’ve led the charge against the Assad regime. I do not support that the Arab League put him back into diplomatic standing by admitting him to the Arab League. And I think America has a lot to do to limit Assad’s influence in the region, which is a partner with the Russians and the Iranians. And that’s not in the interest of the United States, Iraq, Israel or peace in the region. 

MARGARET BRENNAN: You have also been a supporter of Ukraine, and you’ve been trying to find some creative ways to help allow them to gain access to continued U.S. support. There was a tremendous attack just overnight there by Russia. The Biden administration wants to provide a $20 billion loan backed up by frozen Russian assets. Will the Congress give them permission to use that money for military assistance?

REP. HILL: Well, the REPO Act that was included in the national security package I worked on very closely with Chairman Mike McCaul of the foreign affairs committee gives the United States the authority to not only take frozen assets, but confiscate them and use them for the benefit of Ukraine. The loan you’re referring to has been negotiated between the Europeans and the Americans to back the Ukrainian government. I believe that will go through in my judgment. But I would urge President Trump, as he takes office, to actually follow the law and confiscate those Russian assets, as I believe that gives both Ukraine, the United States and Europe a much stronger negotiating position with Russia. And I don’t believe Biden, nor the G7 countries, have been tough enough on Russian on sanctions, on the delivery of weapons that were needed to have ended this war long ago.

MARGARET BRENNAN: You’re gesturing to what we know, which is that this is a pretty dangerous world right now. One of the selections that the President-elect has made to run the Pentagon at this time is Pete Hegseth. He would be the defense secretary, 44 years old, decorated Army vet, TV commentator. Do you think experience is necessary, or is on the job training OK at the Pentagon?

REP. HILL: Well, again, I think this will be assessed by the Senate in their confirmation process. He has a distinguished background in the military, and that counts for a lot, and I think his plans, his thoughts, his leadership, will be exposed when he goes through that Senate confirmation process. But once again, I have to say, President Trump, when he came into office in 2017 had cabinet members that he really had no personal relationship with, had no working background with. He wants to correct that this time by finding people that he has a good working relationship with. He knows how they think. They know how he thinks, because he thinks it will lead to better decision making in his administration. He’s got that prerogative to nominate those men and women and the Senate will have their advice and consent function well underway, and majority leader-to-be John Thune has said look, he’ll be effective. He’ll be speedy. He’ll take it done, get it done in the right course of action. 

MARGARET BRENNAN: Congressman, thank you for your time today.

REP. HILL: You bet. Thank you, Margaret.



Read the original article

Leave your vote

Continue Reading

Copyright © 2024 Breaking MN

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.