What type of home loan we should get against the house we already paid off...

Asked 7 months ago - Tacoma, WA

We have a house in Lakewood WA and we have paid off the house but we are thinking of getting some cash about 50% of the house value...i.e. we are claiming that house is worth 120k and we want to have about 60k cash....what is the best way to get this money? can we get home equity loan or refinance loan? or personal loan? or reverse mortgage loan? we are in the age of 40s...I have learned the line of credit is not good because of higher interest rate...but please advise...

Attorney answers (2)

  1. Shawn B Alexander

    Pro

    Contributor Level 20

    1

    Lawyer agrees

    Answered . If you own the home then you can get a mortgage. Credit Unions usually have better rates because they are non-profit and do not pay tax or shareholders like banks and so can charge less. Talk with several lenders before you decide on what option is best for you.
    This time in your life it is easiest to start proper estate planning and you are too young for a reverse mortgage. See an estate planning lawyer for help to get an idea of what opportunities you have now to protect the equity you have built up.
    Good Luck

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  2. William Henry Charbonneau IV

    Contributor Level 10

    1

    Lawyer agrees

    Answered . Shop around. A regular mortgage is expensive as you pay for loan origination fees, inspections and appraisals and all the other closing costs associated with the loan. The trade off is a lower interest rate than other types of loans. A line of credit is not my first pick either. A home equity loan can be easier to get. Some banks offer NO COST home equity loans as a marketing tool. You pay nothing, although it can be a slightly higher interest rate. Interest rates are so low, that I think a slightly higher rate for a no cost loan might be a good trade off. Again, shop around and do the math. The math being...how much more interest would you pay or save versus the costs you would be paying or saving, and over how much time until you pay the loan off or sell the house.

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