Ask Terry Questions HELOC before Retirement

HELOC before Retirement

By Terry Savage on September 30, 2018 | Housing / Real Estate

I plan to retire in 2 years. Should I open a HELOC now, though not use the money, because of uncertainty of what interest rates will be later on?

Terry Says

It’s not the uncertainty of rates that should motivate you; it’s the ability to qualify for any kind of mortgage loan or HELOC. Once you’re retired, you won’t be able to show “income” — even if you have plenty of savings. And mortgage loan decisions are based on income. So if you think you are going to need a HELOC, apply now.
OR, if you think you are going to stay in your home “forever”, consider a Reverse Mortgage, which withdraws money from your home equity and does not have to be repaid. Thus, income is not a factor. A RM can have costly fees, though, so only plan to go this route if you believe you will stay in your home and pay the costs and taxes on it for many years in the future.



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