Although there are no maximum age requirements for getting a home equity loan or a home equity line of credit (HELOC), you must be at least 18 years old to apply for the loan𒈔. Home equity loans are structured similarly to traditional mortgages, with repayment schedules that can span 20 to 30 years.

Taking out a home equity loan or HELOC in retirement may mean you ༒may not outlive the maturity of the loan. Be sure to carefully consider your finances and your goals, including the advantages and disadvantages of taking out a home equity loan as an older homeowner.

Older Homeow🎉ners Have Lots of Home Equity to Tap

One of the perks of homeownership is the ability to tap into your 澳洲幸运5官方开奖结果体彩网:home equity via a home equity loan or line of credit. Those in retirement who have already paid off their mortgage or are close to paying it in full can use their home equity for cash or income. Homeowners age 65 and older had $250,000 in home equity as of 2022.

Retiree🧸s typically have fewer options to generate additional income beyond Social Security and their retirement accounts. Since retirement accounts and 401(k)s can fluctuate with market conditions, you may not have enough funds to cover an emergency or a one-off big expense.💞

As a result, retirees can tap into the considerable amount of home equity available to meet their living needs. Homeowners age 62 and older were reportedly sitting on nearly $14 trillion in home equity wealth at the end of the 2024.

How Old Is Too Old?

For those concerned about being too old to qualify for a 澳洲幸运5官方开奖结果体彩网:home equity loan or a HELOC, you can put those worries a♕side. It is illegal in the United States to discriminate a🍰nd deny credit based on race, religion, origin, sex, marital status, or age.

Age Discrimination

Due to the 澳洲幸运5官方开奖🏅结果体彩网:Equal Credit Opportunity Act (ECOA), a federal civil rights law introduced in 1974, lenders cannot use age as a reason to turn down your request for a home equity loan or a HELOC. In other words, it’s theoretically possible for even a 100-year-old to get approved for a 30-year mortgage.

Lending Requirements

However, older homeowners are not guaranteed approval by creditors. Like anyone else, they’ll need to prove that they ༺are sensible with money, financially secure, and can⭕ afford the monthly payments.

If your retirement savings plan 澳洲幸运5官方开奖结果体彩网:pays out a decent fix🐼ed💝 monthly income, it can help supplement your other income, like Social Security. Income isn’t the only factor mortgage lenders consider, as the amount of home equity, your 澳洲幸运5官方开奖结果体彩网:credit score, and your track record for making on-time payments and repaying debt are all taken into account.

The Risks of Home Equity🎐 Loans and HELOCs at an Older Age

Just because you can borrow money doesn’t mean that you should. Yes, age won’t impact whether a le𓆏nder accepts your application. However, this doesn’t mean that being older lacks importance. Below are a few factors to consider before taking out a home equity loan in retirement.

Your Income

Consider carefully whether you want to take on debt during this phase of your life. When people retire, 澳洲幸♏运5官方开奖结果体彩网:their earning power often deteriorates. Gone are the days of working full-time, when bonuses, pay raises, overtime, promotions, and side jobs were a possibility. In retirement, you have a fixed income and 澳洲幸运5官方开奖结果体彩网:fewer optio♊👍ns to increase your income.

Fixed or Variable Interest Rate

While a home equity loan may offer fixed 澳洲幸运5官方开奖结果体彩网:interest rates, taking out a line of credit with a 澳洲幸运5官方开奖结果体彩网:variable interest rate could be especially risky for somebody in this situation. If inflation spikes, then that little extra wiggle room you had for emergencies or extras might disappear.

Timeframe

We’re not just talking about a few years here. These loans are long-term commitments that could well outlive you. The average American had a life expectancy in 2022 of 77.5 years, yet they can theoretically borrow money at that same age and agree to pay it back over 30 years.

If you pass away before settling the debt and your heirs are unable to fulfill your obligation, then your property is at risk of 澳洲幸运5官方开奖结果体彩网:foreclosure.

Life or Credit Insurance

If you can afford the premium and aren’t deemed too risky, one way around this is to take out a life or credit insurance policy. With 澳洲幸运5官方开奖结果体彩网:life insurance, the insurance company pays a predetermined death benefit when the policyholder passes away to cover any remaining expenses. 澳洲幸运5官方开奖结果体彩网:Credit insurance, on the other hand, specifically pays off existing debts i✱n the event of death or disability.

The Bottom Line

Age will not necesꦰsarily prevent you from getting approved for a home equity loan or a HELOC since there are no age limits for approval. A home equity loan or line of credit can provide retirees much-needed cash or income.

However, it's important to consider the risks of increasing your debt in retirement since you must remain current with the monthly payments even if your income declines. If you 澳洲幸运5官方开奖结果体彩网:default on the loan, the bank can seize the property throug🅷h foreclosure. Consult a financial professional to help determine whether a home equity loan or line of credit in retiremen🦋t is right for you.