Questions?
Lenders that provide home loans for seniors, or Home Equity Loans, lend mostly based on the appraised value of the home, not the senior’s credit score, job history or income. This means that you may not need to ‘qualify’ like you would for traditional bank financing.
When taking out a seniors’ home equity loan the borrower will receive the funds in a lump sum. The senior borrower will then be required to make monthly payments on this sum until the loan is repaid. The interest rates may be slightly higher than the best market rates available to prime borrowers, especially if the applicants don’t have strong credit scores or a qualifying income. This is the biggest downside to non-qualifying equity loans (the higher interest rate and some lenders even charge a fee).
Home Equity Loans are a good option for seniors that can afford a monthly payment and require a larger amount than a Reverse Mortgage can provide. Equity lenders generally do not lend beyond 65% – 75% of the appraised value of the home.
Advantages:
- Borrowed based on the value of your home NOT your credit score or job history
- You can borrow up to 65 – 75% of your home’s appraised value
Disadvantages:
- Possibly higher interest rates than a prime mortgage
- Requires a monthly payment
- Only available in one lump sum