As the population ages, more people face the uncertainty of whether they can stay in their homes. But an older demographic often has one very useful aid: equity in their home.
And that equity can come in handy. According to an article in Money magazine, homeowners 62 and older hold a record $7.1 trillion in home equity — but just 3.5 percent of the housing stock incorporates single-floor living, no-step entries, and extra-wide halls and doors.
Homeowners with equity can tap into it via a HELOC, or Home Equity Line of Credit. In a HELOC, you're approved for a loan and, rather than getting a lump sum, you take out amounts as you need them. Usually a HELOC has an initial drawdown period of 10 years when you only pay interest. After that time, the loan converts to an installment loan.
This works well for older homeowners, who might tackle one renovation at a time, as needed. Borrowers withdraw funds as needed and aren't required to withdraw the full amount. You repay what you've withdrawn.
HELOCs typically have variable-rate interest rates, though some banks offer fixed rates. And the loans can sometimes extend as long as 25 years.
