I was reading an article on Yahoo Finance yesterday talking about how to get cash out of your home (basically talking about retirees). Whether a retiree or not, I’ll show you a few additional details not commonly discussed, nor pointed out in the article. Take a look.
#1. Sell it…
Selling the house is a great way to get cash, but selling the house plays to the advantage of the realtor. Actually the equity in the house may be more for realtor protection than the homeowners’. Here’s what I mean. First, some people don’t like to borrow money. Fine. Sell the house. Second, and possibly more importantly, look at history. Until the late 1990’s, Texas did not allow home equity lending. The realtors lobbied against it. Common myth says equity is for homeowner’s protection, but in reality, it protects the realtors market. They need sales!
#2. Rent it…
Renting property can take a house of brick and mortar with a ton of cash tied up into a business creating income.
#3. Borrow it…
For homeowner’s who do not go with option #1 or #2, borrowing can be done. However, home equity loans come in a couple of ways with vastly different approaches. The first way is a HELOC (home equity line of credit). A HELOC is simply an amount of money available against the house, but generally uses the house’s original value and does not need new appraisals, etc. Simply put, homeowners are borrowing their own money. The next way is a cash-out equity loan. The cash-out is different than a HELOC, because it allows the current market value of the home to come into play. Simply put, if the house has appreciated in value, owners can take the profits out of the house without selling the house. (See why realtors don’t like the loans?)
4. Reverse it…
Baby boomers are a big target market right now and a reverse mortgage is a hot topic. One might be lured into the idea of getting money out without ever making a payment. True, no payments required (with a couple of stipulations), but any money borrowed has to be repaid…by the heirs or estate for example. If traditional thinking, meaning pay cash or get a loan and pay off the mortgage worked for past generations, why a reverse mortgage now? Fact is it didn’t work for many people. Therefore, if an owner needs money, or potentially will need money, why tie up an enormous amount of money into brick and mortar sitting idle for so many years?
The bottom line is how to get cash out of the home should by why put it there in the first place?
Owning a house may or may not be the American Dream we commonly hear and the answers can be broken down into areas. Real estate decisions and financial decisions. People spend quite a bit of time looking for a house, but what appears to be minutes in deciding about a loan or paying cash. In reality, both are huge decision and they are separate, but equal and should be looked at independently of each other.
Read about it in Barking With The Big Dogs and see what is happening to your (and my) money every day.








