Get Cash for Your Home: Is This Right for You?

If you're a homeowner—especially an older adult homeowner—chances are you've seen plenty of advertisements that promise you can tap your home equity for quick cash. Perhaps it's a reverse mortgage, a home equity loan, a home equity line of credit, or another plan. While these offers can be tempting when you're financially strapped, it's important to consider whether it's right for you. 

Things to Consider 
SOME BASICS, AND WHERE TO LEARN MORE

You've likely heard of at least a few: reverse mortgages, home equity lines of credit, home equity loans, cash-out refinances, home equity investments. While the models differ, in short, they're methods for you to give up some portion of your equity in your home, and have access to cash in the shorter term. 

While that might sound great, it's important to assess a few things.

A good place to start is with our free Financial Education Center. Once you create your free account, you'll have access to a host of self-serve materials, including a lesson on reverse mortgages in the Buying a Home playlist. This lesson offers a simple but thorough look at the kinds of factors you'll want to keep in mind if you're considering offers like this. For example, these plans often come with fees, upfront premiums, closing costs, interest (the rate can be variable, and the amount can be compounded over time!), and other costs. The homeowner will also remain responsible for obligations like property taxes and insurance. 

In other words, there's a lot to think about before you make the leap and opt for a "cash from your home" plan. The best way to weigh your options? Talk to a HUD-approved housing counseling agency who specializes in guidance on these questions, and get personalized advice on whether this could be a good path for you.

Think of Your Choices
IS SACRIFICING HOME EQUITY THE ONLY OPTION?

Your home is a powerful asset. According to a Habitat for Humanity evidence brief, homeowners in this country "have an average net wealth that is 400% higher than that of renters with similar demographics and earnings, and home equity represents the largest proportion of wealth"—and that proportion is much higher if you're a low-income homeowner. So, dipping into that equity should be done with care, and only if you can plan confidently and comfortably afford the repayment terms.

Looking to tap into equity so you can repair your home? If you earn a limited income, you may qualify for home repairs through our Home Preservation team at Habitat! 

Do you feel backed into a corner and are considering a "cash from your home" plan in order to manage your finances? You may have viable alternatives, and Habitat's Housing and Financial Counseling team is here to support you with free one-on-one counseling, a free self-serve Financial Education Center, and free financial education workshops that can help you manage your budget and debt. Take charge of your finances so that you have plenty of options.

Regretting the Plunge?
when "cash from your home" goes wrong

Have you already taken the plunge, and you're wishing you hadn't? Sometimes, the best laid plans for repayment can fall through. Unfortunately, there are also predatory lenders out there who specifically target homeowners with limited incomes—particularly older adult homeowners who have a lot of equity in (or have even paid off) their homes. In these cases, people may fall prey to manipulative or deceptive tactics, paired with abusive loan terms.

Some find themselves facing collections or the risk of losing their home. Others find that their repayment history has left their credit in dire straits. Some homeowners have depleted their home equity to the point that they cannot qualify for assistance options like Habitat's Home Preservation Program.

If you find yourself in this or a similar situation, talk to us. One-on-one counseling with a Habitat counselor is free, personalized, and a great place to start.