Almost free cash

[Bossman]

My thanks for everybody's comments, even the brief hypercritical comments. In response to some of the caveats, the HELOC is only callable, if you violate the terms of the agreement. For instance, if you miss payments, the lender can call in the entire loan. In addition, the lender can restrict additional drawdowns for other reasons.

I have verified that the monthly payment is indeed only $572.92. But, what I did not realize is that the initial payments represent interest-only payments during the initial draw period. After the draw period, both principal and interest payments are required on the outstanding balance (ouch!). This particular equity line has a 10 year draw and 15 year payment period.

Although, I still feel that the risks can be managed, I have decided to not go down this path. The primary reason for rejecting this approach is that the wife said, "no way".

 

[Winemaker]

The last time I heard of this strategy was my boss, back in 1999. His line of thinking was "with all this 401k money coming into the stock market, it HAS to go up, it's a no brainer". He was still w*rking when I retired ~7years ago.

 

[MichealKnight]

Good topic

Sort of related....be it HELOC or Mortgage or Line of Credit....

..... can you even be approved for such loans if you are early retired?

In my case, I have very good assets, liquid assets to show. But no job.

My bank said "no" to mortgage for rental houses, but they say YES for commercial mortgage if I wanted to buy a property that is leased to Taco Bell, etc. I asked the guy...so I can't put 50% down, on a $200,000 house....but I can put 20% down, on a 2,000,000 leased property? He said, yes.

I 've not checked yet, but there's gotta be a way. How do retirees buy houses otherwise