Considerations Regarding Getting a 401k Loan vs. Getting a Reverse Mortgage vs. Equity Sharing Agreement
When it comes to retirement planning, there are a variety of options available to help you achieve your financial goals. One option that you may be considering is taking out a loan from your 401k. However, there are other options to consider as well, such as a reverse mortgage or an equity sharing agreement. Here are some things to keep in mind as you weigh your options:
When you take out a loan from your 401k, you will have to pay it back with interest. This can be a good option if you need money for a short-term goal, such as buying a home or starting a business. However, you should be aware that if you leave your job, you will typically have to repay the loan within 60 days.
A reverse mortgage can be a good option if you are 62 years of age or older and own your home outright. With a reverse mortgage, you can borrow against the equity in your home and receive the money in a lump sum, as a line of credit, or in monthly payments. The money you receive from a reverse mortgage is not taxable and does not need to be repaid until you sell your home or pass away.
Equity Sharing Agreement
An equity sharing agreement is another option to consider if you own your home outright. With an equity sharing agreement, you can sell a portion of your home’s equity to an investor in exchange for a lump sum of cash. The investor will then share in the profits (or losses) when you sell your home. This can be a good option if you need money for a short-term goal and want to avoid taking on debt.