Q:

What are some loans for retirees?

A:

Quick Answer

Loans for retirees include home equity loans and home equity lines of credit, notes the National Endowment for Financial Education. These loans are available as a one-time payment or as a distribution over time.

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Full Answer

A home equity loan requires a fixed payment term and fixed payment amounts. Borrowers make balance payments at a defined period, such as each month, states the National Endowment for Financial Education. After a borrower pays the loan in full, he can apply again; however, fees apply. Retirees can take out a home equity loan for a number of purposes, such as for home repairs, college expenses or a family vacation. The equity represents the difference between what the associated home is worth and the remaining amount owed on the mortgage, reports the Houston Chronicle.

A home equity line of credit offers a variable interest rate. Under this type of loan, interest rates fluctuate, causing costs to rise or fall over time, states the National Endowment for Financial Education. Borrowers can combine features of the home equity line of credit with a home equity loan by drawing a portion and locking it in at a certain rate. Home equity lines of credit operate similar to credit cards in that there is a maximum amount a borrower can withdraw, reports the Houston Chronicle.

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