Can You Borrow Money If You're Retired?

Can You Borrow Money If You're Retired?

After you retire, your circumstances can change, for better or worse. There are several ways that you might be able to borrow money when you’re no longer working.

Take Out a Mortgage
You might decide to move to be closer to relatives. When you apply for a home loan, a lender will look at your income, which might include investments, Social Security payments, earnings from rental property and other sources. A lender will also consider your debt-to-income ratio.

If you want to buy a house, it may be difficult, but not impossible, to qualify for a mortgage. A lender will be more interested in your ability to repay the loan than the amount of money you have coming in each month. 

Use Home Equity
If you already own a house, you can tap into your equity and get funds that you can use for a variety of purposes. You can take out a home equity loan and receive a lump sum that you will pay back each month at a fixed interest rate, or you can get a home equity line of credit, use funds as needed and pay them back at a variable interest rate.

Another option is a cash-out refinance. You can refinance your existing mortgage for more than you currently owe and get the difference in cash. Get quotes for a home equity loan and a cash-out refinance from several lenders and compare interest rates and other terms.

You might want to consider taking out a reverse mortgage so you can borrow against your home equity and receive funds in a lump sum or monthly payments. The loan won’t have to be paid back until you move out or pass away. Before you take out a reverse mortgage, conduct research and get professional guidance to avoid a predatory loan.

Consolidate Debt
If you have credit card bills and other forms of debt, you might want to consider a debt consolidation loan. You will be able to make one monthly payment, rather than several, and pay off your debts over a longer period of time. 

Buy a Car
If you need a new vehicle after you retire, you might find it relatively easy to qualify for a car loan since the vehicle will be used as collateral. Just make sure the monthly payments won’t strain your budget.

Take Out a Personal Loan
If you need money to cover an unanticipated expense, you might want to take out a personal loan. A secured loan will be backed by collateral, such as your house. If you don’t repay the loan, the lender can seize your assets. An unsecured loan won’t put your assets at risk, but it will likely have a higher interest rate. 

Protect Your Investments
Borrowing money from a retirement account is another option, but you should generally avoid that if possible. You don’t know what the future holds, and you don’t want to deplete your savings and be unable to make ends meet. 

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