New Uses of Assets: Real Estate

If you need cash and own your own home, there are a batch of alternatives to consider, each of which are discussed in other sections of this article:

• Mortgage refinancing
• Home Equity Loans and Lines Of Credit
• Reverse Mortgages
• Renting your residence
• Selling your home
• Sale-leaseback Arrangements
• Sale of your home subject to a Life Estate

Before using any of the alternatives:

• Consider the risks, tax implications, and effect on your lifestyle.
• Be sure to explore new uses of other assets such as life insurance, credit, retirement planning, and other assets before deciding which alternative is best for you.
• If you have a financial crunch, using your home for cash is just one of the many avenues to consider. See How To Deal With A Financial Crunch for other ideas.
• If you receive cash or decrease your monthly expenses by getting cash from the equity in your home, you could jeopardize your eligibility for public welfare benefits based on your financial need. For example, Medicaid, Supplemental Security Income (SSI), and food stamps. Medicare, Social Security Disability Insurance, retirement benefits, and private insurance benefits will not be affected.

NOTE: If keeping track of maintenance of your home is difficult, consider the following:

• Write a list of instructions which includes what needs to be done when.
• Use an online calendar such as www.calendar.google.com. You can set items to recur.
• If you have a smart phone, use an app such as Home Maintenance by Pojo Software.

With a reverse mortgage, you use the equity in your home to receive a monthly, tax-free, payment from the lender. Generally, repayment is not necessary until the owner sells the house or dies.

You can rent all or part of your home, on either a long term or short term basis. A rental brings in cash, and companionship.

You can even turn your home into an assisted living facility if you need, or will need, assistance.

While selling your home is not usually a way to get money from your house quickly, it may generate the most cash of all the alternative uses of your home.

A sale-leaseback is a legal arrangement where you sell your home to a buyer who then leases it back to you. You basically change your relationship to your home from owner to renter -- and get cash equal to your equity.

A sale subject to a life estate lets you remain in your house for the rest of your life. You sell the house, but you have the right to live there as long as you live.

The terms under which you stay in the house are negotiable, though generally you have to maintain the house while you’re in it.