Home equity

And there's expenses and closing costs, not to mention the interest that you'd pay on the money you're taking out.

And then anything we would use that home equity for via the new loan to pay off, we're now securing those debts to your house, which would not be the case today.

So I would prefer we look for other options to satisfy those obligations.

Give me just kind of a quick overview of the kinds of things you're thinking about that you're trying to clean up.

That's the kind of thing that I would be, you know, willing to say, yeah, let's go that direction because to your point, it allows you to keep this home in at least good working order.

So that you're preserving the value of the asset, but keeping the interest rate as low as possible.

So that would typically be what we call a home equity line of credit or HELOC for short.

And you're going to want to look at credit unions, local banks, maybe a few national lenders.

You have to have like $1,500 of assets total, and then there's some caveats.

There's a bunch of qualifications of like you can have 650,000 or something of home equity, and you can have different things.

But basically, if you have any assets at all, you don't qualify for Medicaid.

I think that's how it'd be for Social Security.

So we're gonna list here.

We got a couple of them.

We got cash, brokerage account, 401(k), home equity, Social Security, and a policy loan.

All right? So what is it built for? What's cash built for? Small immediate jobs.

So if your balance sheet looks strong, you tend to spend a lot more.

So I think it's the stock market, home equity.

If you feel confident in the value of your house, you tend to spend as well.

Obviously, the recent rise in interest rates and mortgage rates should have some impact likely on the housing market.

So...

Putting a home equity line of credit against your home is minimal expense, and it's a great defense against people trying to steal your homes.

And you do not get charged interest until you pull money out of your home.

Make sense? Not to me, but hopefully...

Yes, correct.

Question.

You know how sometimes you can reach out to your credit card company and ask them to raise your limit? If you have a home equity line of credit and you would like to get a larger home equity line of credit...

Can you just call your lender or I'm sure you have to have proof of employment.

Well, let's keep going.

What is number six on the list? Misusing home equity.

So refinancing or taking out cash out of your home means handing some of that ownership over to someone else.

And that could make sense in certain situations like lowering your rate or paying off higher interest debt.

But it's not something to take lightly.

Yeah.

What about a home equity line of credit? I hear a lot about these or a HELOC.

Yeah.

people and I helped them out.

They got home equity lines of credit, you know, to get themselves out of credit card debt or whatever it is.

So like people are looking, especially in our area.

We're like in this little bubble in Monmouth County or just section of Jersey that people's equity in their property is so

And I mean, not to live like an irresponsible lunatic, as I bootstrap my company, I've had to take on debt to get ahead and it's stressful to people.

People get stressed out with debt, but you can roll.

So with my friends in financial crisis, If they have like debilitating credit card debt that's maxed out, they could pull home equity line, consolidate their debt, and then obviously correct their bad behavior and not live on credit cards.

But that's why you talk to a professional and get ideas and challenge your thinking.

Well, Rob, it really comes down to tradition and culture.

It's always been separated out that even though the home equity is wealth, it's wealth that is put aside and designed simply to be leaving it to your children.

You pay off the house and leave it to your children, and there's no other thought in it besides that.

And that doesn't mean that everybody needs to tap their home equity, but we should think about how it fits in with our overall wealth no differently than what we look at our IRAs or our savings accounts.

Yeah, I think that's right.

It's certainly an asset alongside those other assets.

And for many older homeowners, that equity represents a significant portion of their wealth, especially in light of the rising home values we've experienced.

Just how important has home equity become in retirement planning today, Harlan?