Three Ways Your Home Value Can Help in Retirement by BPT - City News Group, Inc.

Community Calendar

MARCH
S M T W T F S
01 02 03 04 05 06 07
08 09 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31 01 02 03 04
View Events
Submit Events
directory

Three Ways Your Home Value Can Help in Retirement

By BPT,
April 19, 2016 at 09:20am. Views: 156

Your retirement. Your golden years to spend doing the things you enjoy - hobbies, travel, more time with family, and so on. But can you afford to live your post-paycheck life the way you always hoped? Research from the National Retirement Risk Index estimates that more than 50 percent of households lack enough retirement funds to maintain their pre-retirement standard of living - even if they work until age 65. It's a scary statistic, especially if you're approaching retirement age and don't feel financially prepared to leave the workforce. Fortunately, even if you are facing a retirement shortfall, you do have options to help supplement your savings. For senior homeowners, those options could be in the walls around you. Financial planning experts and academics from The American College, Boston College, Columbia University, and MIT, agree that incorporating home equity into a retirement plan helps savings last longer. The question is: what's the best way to access your home's equity? Here are three popular options. 1. The home equity line of credit (HELOC) A HELOC allows you to establish a line of credit based on a percentage of the value of your home. You can then access this credit during a predetermined amount of time called a "draw period," usually 10 years. During the draw period, you can borrow up to the designated amount while making monthly interest payments, and, if you choose to pay back on the principal, you can draw out again, much like a credit card. After the draw period when the HELOC resets, you are responsible for repaying the principal and interest either immediately or over a set period of time depending on the terms of the loan. You should be aware that if your home value depreciates, or if your financial circumstances change, the lender has the right to freeze your credit or even cancel your loan. 2. Reverse mortgage A reverse mortgage is a loan that senior homeowners age 62 or older can use to convert part of the equity in their home into a usable asset, without giving up title or ownership of the house. According to Professor Wade Pfau of The American College, "the reverse-mortgage option should be viewed as a method for responsible retirees to create liquidity from an otherwise illiquid asset." Reverse mortgages are attractive to seniors, in part, because they require no monthly payment and do not have to be paid off until the last borrower permanently leaves the home. You have the option of taking the loan proceeds as a lump sum, a fixed monthly or tenured payment, or as a line of credit. Last year, more than two-thirds of borrowers took a combination of regular payments and a line of credit. Reverse mortgages also feature a non-recourse provision that protects you from ever owing the lender more than the value of your home, even if the house is "underwater" when you are ready to sell. You are still responsible for paying your property taxes, homeowner's insurance, and upkeep expenses or risk the loan being called due and payable. 3. Cash-out refinancing Cash-out refinancing allows you to refinance an existing home loan - hopefully at a lower interest rate - and also refinance the home for a dollar value higher than the remaining principal. This loan allows you to keep the money above the principal as liquid cash that can be used to pay down other expenses or fund your retirement. Like your original forward mortgage, if you miss a monthly payment due to unanticipated expenses from a health care emergency or other life disruption, your loan could be called due and payable, and the lender could move to foreclose on your property. Retirees may also face challenges qualifying for a cash-out refinance because of underwriting standards that require a certain amount of monthly income. Choosing the right plan for you While all three plans have their appealing points, new consumer safeguards for reverse mortgages are fueling their popularity among seniors who want the benefit of no monthly payment, a loan that can't be canceled or reset, and the option of a line of credit that increases over time. If you're interested in pursuing a reverse mortgage, the National Reverse Mortgage Lenders Association can help. Their Roadmap can guide you through the features and responsibilities of reverse mortgages and the process for obtaining one which includes meeting with a reverse mortgage counselor and a financial assessment. Visit www.reversemortgage.org/equity to learn more about how the solution to your retirement may have been under your roof all along.

Related Articles

Photo Courtesy of: City of Moreno Valley

By Ruby Stephenson, Community Writer

January 29, 2026 at 09:50am. Views: 802

Come check out Flight Deck Bike Park!
Flight Deck Bike Park is the largest Velosolutions pump track in Southern California.

Photo Courtesy of: ChatGPT (AI-generated)

By Charmaine Mislang, Community Writer

March 10, 2026 at 01:27pm. Views: 377

AI-generated image of a family of four sitting at a kitchen table, looking together at a laptop while holding CalFresh informational materials and an application form. The adults and children appear engaged and focused, suggesting they are reviewing or applying for food assistance benefits.

Photo Courtesy of: SBC Transitional Assistance Department

By William Cortez, Contributing Writer

March 10, 2026 at 01:27pm. Views: 393

A San Bernardino County Transitional Assistance Mobile Office vehicle is parked outdoors as a staff member stands in the doorway assisting a woman holding a tote bag. The vehicle displays information about applying for CalWORKs, CalFresh and Medi-Cal, highlighting mobile services available to county residents.

Photo Courtesy of: CUSM

By Cynthia Baker, Contributing Writer

March 10, 2026 at 01:27pm. Views: 478

Taken on July 22, 2025: The MD class of 2029 MD took the Hippocratic Oath and received their white coats, symbolizing entrance into the medical profession.
"This class brings the largest number of Inland Empire-based students to a CUSM MD class," said Paul Lyons, MD, President and Dean of California University of Science and Medicine. "It is core to our mission to support the communities of the Inland Empire in terms of education and health accessibility. Admitting qualified IE-based students is a major part of bringing our mission to life."

Photo Courtesy of: Jesus Ocegueda

By Jesus Ocegueda, Community Writer

March 10, 2026 at 01:27pm. Views: 367

Chelsea Evans, founder of Honey Butter Brittle by Heavenly Delights Company, smiles while holding packages of her homemade honey butter brittle. Her small-batch treats are known for their soft, creamy texture and variety of bold, handcrafted flavors.

Photo Courtesy of: Its Boba Time, Colton PR Coordinator

By Richard Lee, Community Writer

March 10, 2026 at 01:27pm. Views: 424

Students from Paul J. Rodgers Elementary School sit together on a classroom rug, while a volunteer from It's Boba Time holds up a colorful children’s book, during a story-time activity.

Photo Courtesy of: Not Supplied

By Dr. Timothy Jenkins, Community Writer

March 10, 2026 at 01:27pm. Views: 473

Photo Courtesy of: TME Photography by Titan Mom Elvira

By Titan Mom Elvira, Community Writer

March 10, 2026 at 01:27pm. Views: 344

GTHS Athlete of the Week: Samyah Green

Photo Courtesy of: Mike Hoover

By Colonel John Morris, Community Writer

March 10, 2026 at 01:27pm. Views: 440

Col John Morris is a retired Air Force Officer with over 40 years of combined military and civilian service to his country.

Photo Courtesy of: Upmost Barbershop

By Ruby Stephenson, Contributing Writer

March 10, 2026 at 01:27pm. Views: 357

A barbershop chair sits beside a wall mural featuring large scissors and the logo for Upmost Barbershop inside the shop.

Photo Courtesy of: City of Moreno Valley

By Ruby Stephenson, Contributing Writer

March 10, 2026 at 01:27pm. Views: 235

Three children play basketball on an indoor court, with one child dribbling the ball while the others move nearby.
In Moreno Valley, there’s never a dull moment—especially when it comes to sports and recreation!

Photo Courtesy of: City of Moreno Valley

By Ruby Stephenson, Contributing Writer

March 10, 2026 at 01:27pm. Views: 427

After closing on February 19, due to several Life Safety and Fire Protection violations, the Moreno Valley Mall is now permitted to reopen.

--> -->