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Question for the Money Doctors

Question submitted on Mar 24, 2011.

Question

I am 66 years old. I want to do some home repairs. Should I refinance and get a home equity loan, do a Reverse Mortgage or borrow from my TSP?

Answer

Without sufficient facts about your personal financial situation, I can't give you a direct answer.  All of your options are acceptable for different circumstances.  Are you still working?  Are you on a fixed income?  What are the terms of your current first mortgage?  How much equity do you have in your home?  Are you spending money on "repairs" or "capital improvements"?

If you are on a fixed income it might not be a good idea to incur more debt with a home equity loan.  Besides, given the recent real estate climate, you may not be able to get a home equity loan.  You may however, depending on the equity in your home and the current mortgage terms, be able to refinance your home at a lower rate and pull out some cash to use for the repairs.

I have never been a fan of reverse mortgages, except under some very specific circumstances.


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