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Capitalizing on Home Equity - Baby Boomers & Real Estate

Baby Boomers, homeownership has offered you a significant financial advantage - home equity. In 2024, many Baby Boomers are leveraging this equity to supplement their retirement funds. This represents a great opportunity, however as always opportunities have risks.

Understanding the options that are available along with the important considerations, and the associated risks are important steps in helping Baby Boomers make informed decisions related to their home equity. In this blog post we define them and suggest a 10-step plan of action.

Information & Options:

  1. Home Equity Loan: This loan allows you to borrow a lump sum using your home's equity as collateral.

  2. Home Equity Line of Credit (HELOC): Similar to a credit card, a HELOC allows you to borrow as needed, up to a certain limit.

  3. Reverse Mortgage: For homeowners aged 62 and above, this allows you to convert part of your home's equity into cash.

  4. Selling & Downsizing: Selling your larger home and moving into a smaller, cheaper one can free up equity.

  5. Stay & Grow You Equity: Staying in your home with a well thought out long term plan makes sense for some Baby Boomers.

Top 10 Considerations:

  1. Interest Rates: Understand the current rates for equity loans, HELOCs, and reverse mortgages.

  2. Fees: Be aware of potential closing costs, origination fees, and annual fees.

  3. Repayment Terms: Know the repayment terms and your ability to meet them.

  4. Impact on Social Security & Medicare: Some options may impact these benefits.

  5. Tax Implications: Interest on a home equity loan or HELOC may be tax-deductible.

  6. Housing Market: Current market conditions can affect the equity of your home.

  7. Financial Need: Assess your need for additional funds and consider other options as well.

  8. Long-Term Plan: Consider your long-term housing plans.

  9. Risk: Understand the risk involved, including potential foreclosure for non-payment.

  10. Consultation: Consult with a financial advisor to understand which option is best for you.

Suggested 10-Step Guide:

  1. Evaluate your financial situation and needs.

  2. Determine your home's current market value.

  3. Calculate your available home equity.

  4. Research your options: home equity loan, HELOC, reverse mortgage, selling, or staying.

  5. Consult with a financial advisor and real estate professional.

  6. Compare interest rates and terms from different lenders.

  7. If appropriate, apply for the chosen option.

  8. Review the terms carefully with your financial adviser, real estate professional, and lender before signing any agreement.

  9. Use the funds wisely, keeping in mind this is a loan to be repaid.

  10. Make a long term plan, including repayment plans if appropriate.

Bottom Line:

Remember, while home equity can be a valuable resource, it is essential to use it wisely and consider the long-term impacts. If you would like to discuss this topic further and/or are ready to act, let's connect. We can help, and would be honored to assist you.

Disclaimer: This Baby Boomer & Real Estate series, the associated blog posts, and our website are not designed to and do not provide medical or legal advice, professional diagnosis, opinion, treatment, or services to you or to any other individual. Through this series, the associated blog posts, and our website, and linkages to other sites, Transformation Advisory, LLC DBA DFWREAdvisors Group, provides general information for educational purposes only. The information provided in the series, the associated blog posts, this website, or through linkages to other sites, is not a substitute for medical, legal, or professional advice or care, and you should not use the information in place of a visit, call, consultation, or advice of an attorney, mortgage professional, real estate professional, medical professional or other licensed services provider. Transformation Advisory, LLC DBA DFWREAdvisors Group is not liable or responsible for any advice, course of action, or treatment, or diagnosis, or any other information, services, or product you obtain as a result of reading this series, the associated blog posts, this website, or through its linkages to other sites.


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