Heloc at age 55
I’m curious the best time to consider a HELOC. I’m 55 years old and bought my home in 2015 due to a divorce. I have 23 years left and 203,000 on a home valued between 350 and 400. Mortgage payment is $2300 monthly. My mother is a co-signer. I have 2 20-year-old trucks and may need money at an unexpected time. I am self-employed. The body isn’t as young as it used to be and I’m considering taking social security at 62. From what I’ve heard I can claim 50% of the ex wife’s benefit. Not a place I thought I would be in 30 years ago.
Thank you!
Terry Says
This is the biggest hodge podge of questions — and misconceptions — I can imagine! Let me try to unravel your situation, without a lot of other information that would be helpful.
First, did you take my advice and refinance your home at lower rates? If your rate is below 5%, then just keep paying your mortgage. I’m assuming your credit is bad, which is why your mother had to co-sign. She is likely in retirement now and couldn’t co-sign again! And if your credit is still bad, you’d need her to co-sign for a HELOC – so just forget that idea.
You’ve owned your home for the past 7 years. You have at least $150,000 of equity in it. If you haven’t managed to save any money in that time, at least your home has done it for you. If you don’t even have enough money to fix a truck (and why TWO old trucks — sell one and fix the other with the money), then you definitely don’t have good enough finances to qualify for another loan on the property.
In fact, this might be a good time to sell your home and put the money in the bank. But you’d have to rent, because you and your retired mother won’t qualify for another mortgage.
As for Social Security, I don’t know how many ways to tell you that your thinking is wrong! First, don’t you qualify on your own work record? I’m assuming you were married at least 10 years, so you could qualify on your ex-wife’s account to get 50% of her benefit. But she must be at least 62 and qualify for SS. And your benefit will be permanently reduced and SIGNIFCANTLY reduced if you take SS early on her record. (And since you can’t claim on both, they will automatically give you the higher of yours or 1/2 hers at age 62.)
By waiting until at least your full retirement age, you will get almost 8% a year increase in benefits.
And since you were born after Jan 1, 1954, you can’t switch back to your own work benefits later.
Taking SS early is the worst thing you can do!!
So you need some financial guidance. I suggest you call the National Foundation for Credit Counseling at 800-388-2227. They can help you set up a spending plan so you can keep working and save more money! If your body can’t handle your current job, there are plenty of jobs out there going begging. Find one.
