Cash From Your Home

A family home or other personal residence is a major source of wealth for many seniors. But those who are house rich and cash poor may wonder how they can tap some of that wealth, aka home equity, so they can use it for other financial needs. Read on for four ways to get cash from a house.

Sell it

The most straightforward way to turn a house into cash is to sell it.

Younger seniors, say, 50 to 70 years old, sometimes sell their home so they can move closer to their children and grandchildren according to Jeff Hollansworth , Owner of RE/MAX in the Village. Older seniors, in their 70’s and 80’s are more likely to sell due to health issues, especially a serious illness or injury that makes the home burdensome.

Jackie Butler Estate Sales in the Village is a valuable resource to assist seniors with disposing of furniture and can help coordinate some or all of the work. "Once they understand they don't have to do it all by themselves, and they've determined where they want to go... then they get excited about it,” says Butler .

Rent it

Another option is to move out of the house and rent it to tenants. Younger seniors sometimes rent out their home because they want to move, but aren't willing to sell the property at what they perceive to be less than market value. Older seniors more often choose the rental option as a short-term transition when they move to a long-term care facility giving them an option to return.

“Being a landlord entails some risks and headaches,” says Gary Strong , Property Manager at RE/MAX in the Village. “Firms like RE/MAX can help find tenants, collect rent and handle repairs and maintenance.

Borrow it

Seniors who have equity in their homes, investments or other income, can borrow against their home with a home equity loan or home equity line of credit, or HELOC. A loan is for a specific amount over a stated term, while a HELOC has more flexibility. In either case, the borrower must make payments on the loan or line of credit.

Qualifying for a home equity loan or HELOC doesn't require a paycheck or employment-related income. Instead, seniors can use their investment income, rents from rental properties or other sources to qualify.

Reverse it

A Home Equity Conversion Mortgage, or HECM, or a reverse mortgage, allows homeowners who are at least 62 years old to borrow against their equity without selling their home or making payments.

This option may be a good choice for seniors who can afford to maintain their home and pay the costs of homeownership, but want to obtain a lump sum, line of credit, fixed monthly payments or a combination of these.

Once borrowed, the equity is no longer available for future financial needs or to be passed on to beneficiaries. Instead, the house usually is sold to repay the loan, which comes due when the senior permanently moves out, sells the home or dies.