As a senior or recent retiree, you have likely invested a lot of time and hard earned money into your savings plan. That’s does not mean, however, that there may not be a time in the future when you need to borrow money. You may think getting a loan can be difficult without regular income, but there are still ways seniors can their hands some cash cash when needed.
The Bank of America lists a few options for senior lending but advises that it’s never a good idea to take money out of your existing investments like your 401K or IRA. Whenever possible, those funds should be left untouched so they can be used for your future.
Whether it’s unexpected medical bills or extra funds to do repairs around your home, getting a loan for funds as a senior can sometimes be a challenge. Do your homework to find out the best options to help understand the small things, like the difference between secured and unsecured loans, before you decide on a lender.
Secured Loans
The easiest and fastest way to get your hands on extra funds is by taking out a secured loan. When you put an item like a vehicle or a property up as collateral for a lender, you are much more likely to be approved. The collateral reduces the risk that the lender is taking, and thus results in much better borrowing terms and lower interest rates.
Home Equity Loan
As you make payments on your mortgage, you will continue to add equity to your home. This amount can be borrowed with lower risk to lenders. You must retain at least 20% equity on your mortgage to qualify for larger loan amounts. The loan may be consolidated into your current mortgage which will extend your loan repayment schedule but help you keep your costs down with no fees or penalties for early repayment.
Cash Out Refinancing
This type of loan has its advantages for people who are still holding an existing mortgage. The cash out refinancing loan can help you borrow more than you currently owe but less than the market value of your home. Use your funds to invest, travel or make home improvements while remaining the primary owner on your property.
Reverse Mortgages
This is a popular option for many seniors that want to supplement their retirement income. You can negotiate a retirement income based on the current market value of your home. Most reverse mortgages are not paid back until you move out of the home, or if the homeowner has passed away.
Debt Consolidation
If you don’t need cash right away but you want to streamline your expenses, you may want to consider a debt consolidation loan. Instead of paying multiple creditors with different terms and interest rates, you can pool your debts together into one convenient payment. You may end up with an overall longer payment schedule, but you can save money and headaches by negotiating better terms and a lower interest rate on a single amount.
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