Real Estate Home Mortgages/Home equity loan

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Question
Hey, excuse me if I am asking the wrong person.  If I am, please direct me to the right person.

My husband and I are in our late 60s, we have no children, alive or dead, our home is paid for, we have a home equity loan and checks to use for it.  We have not used the equity line of credit in about 8 years and owe nothing.

I said all that to say this…..our line of credit is $100,000.00 and the interest or finance charge is 1% below prime.  Is there any reason why we shouldn’t be using the money available to us and only pay the finance charge.  We are living comfortably, but we would like to travel some.

Would a time come when we would be required to pay back this equity loan or will, upon our deaths, this amount will just be deducted from value of home.

We do not have a will, (I know we should).  He and I both have siblings and lots of nieces and nephews.

Answer
I am happy to assist with your question.  As long as you are ok with the interest charges that accrue and you can make the payments then there is no reason you can't use the line of credit.  When the home is sold it would come out of your home equity at that time.  There are two possible issues, one would come if you stopped making payments- the lender could then start foreclosure proceedings. The other possible issue would be the expiration date of the line of credit.  Most lines are good for a period of time, such as 5, 10 or 15 years from the origination of the loan, then it either requires a full repayment or becomes a closed loan with a fixed payment at that time. You could try to refinance it at that time, but you should know what the termination clause of the line is. don't assume your lender will extend the term of the line of credit. That assumption could create problems down the road.

The other option you could look into is a reverse mortgage line of credit.  It would work the same way as the line of credit you have, except no payments would ever be required- you could make them if you want but would not be required to- and the proceeds of the loan are deducted from the sale of the home when you move, or upon your death.  Your heirs would have the option to  keep the home, sell it and get the equity, or turn it over to the bank without any recourse to them.  

I often recommend reverse mortgages For seniors over age 62 who plan to stay in their home long term.  The mortgage is often misunderstood, but has several benefits to seniors and are safer than a standard line of credit.  The closing costs are a bit higher, but you get far more protection if you are ever in a situation where you cannot or do not want to make payment. You are also protected from the loan having an expiration date, you are guaranteed to have the loan available as long as you live in the home.  That kind of protection is unparalleled by any other mortgage products.

If you want more information on the reverse mortgage you can read about them at www.reversemymortgage.com.  I wrote most of the articles on the site.   If you wish to use your current line of credit I would recommend looking into the terms to see when the line of credit comes due to ensure you don't have any surprises down the road.

Feel free to ask any follow up questions.  I hope this insight helps a little.
About Real Estate Home Mortgages
This topic answers questions related to purchasing a home, owning a home, home ownership, mortgage education, mortgage applications, and mortgage needs whether buying a first home or refinancing a current loan. Issues related to home ownership, home equity, mortgage education, refinacing options, home improvment finacing, first time home loans, home equity loans, vactation home loans, and mortgages for investment homes are dealt with here also. Though not the primary focus of this topic, Home Equity Lines of Credits (HELOCS), reverse mortgages, and calculating home equity may also be asked. If you do not see your home mortgae, home finacing, or home equity question answered in this area then please ask a question here

Real Estate Home Mortgages

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Mark Schow

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Can: reverse mortgage, mortgages of all types, debt management and settlement, foreclosure problems, real estate investment strategies. Can't: real estate law, standard banking outside mortgage and debt.

Experience

2002-2004 President of the Utah Association of Mortgage Brokers (UAMB) 2004-2008 Board member UAMB, Fraud task force chair, PR chair, Legislative chair. 2002-2005 Delegate to National Association of Mortgage Brokers, Legislative committee. 1996-2008 COO Debt Free Living- Now Debt Fast Track. Founder of company- consumer debt elimination company. 1994-2008 President Secured Financial Freedom. Mortgage broker, serviced nationwide, 120 employees and handled real estate investment loans for the Carlton Sheets group and some Rich Dad clients. 2005-2011 ARES, LLC. Owner, Manager. Private money investments, business consulting. 2011- present, Reverse My Mortgage, LLC. Managing Member. Reverse mortgage education, marketing and sales. 2011- present. Salt TV Network. Financial contributor, Sales Manager.

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UAMB, NAMB

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Ezines.com, Authorstream.com, articlesbase.com, articlealley.com, yahoo answers, wiki answers, UAMB newsletters.

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High School- Alta High graduated 1984 Brigham young University- 1986-1991 Business Finance Major

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Salttvnetwork.com, Doreen Stein, PEI institute, Franklin Covey Coaching, Capital Financial Group, the rest are consumers- cannot give out names due to privacy but have had thousands of clients both for debt elimination and mortgage work.

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