The Million Dollar Question: Reverse Mortgages vs. Second Mortgages vs. 401K Loans
When you retire, you want to have enough money to cover your costs. One way to ensure this is to have a solid plan for how you will access the equity in your home. A reverse mortgage, second mortgage, or 401k loan are all options to consider. Here are some things to keep in mind as you decide which option is best for you:
Reverse Mortgage:
-You must be 62 or older to qualify
-You must own your home outright or have a low mortgage balance
-You can stay in your home as long as you like
-You don't have to make any monthly payments
-The loan is repaid when you sell your home or pass away
Second Mortgage:
-You must have equity in your home to qualify
-The interest rate is typically higher than a first mortgage
-You will have to make monthly payments
-The loan is repaid when you sell your home or refinance your mortgage
401k Loan:
-You must have a 401k account to qualify
-The interest rate is typically lower than a second mortgage
-You will have to make monthly payments
-The loan is repaid when you leave your job or retire
Which option is best for you depends on your individual circumstances. Talk to a financial advisor to get personalized advice.
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