Mortgage  Question?
Options for taking cash out home owned free and clear

We own our home free and clear and want to access our equity in the property. Our source of income is a little unusual so I am not sure if we qualify for a traditional loan. What are our options for taking cash out of our home?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

Your ability to access the equity in your home depends on your personal financial profile including your monthly income, debt, assets and credit score. If you generate sufficient monthly income relative to your monthly debt and you have a good credit score you should be able to access the equity in your home through a cash-out refinance, home equity loan or home equity line of credit (HELOC). You can use our Mortgage Qualification Calculator to determine what size mortgage you can afford based on you monthly income and debt.

If you do not have sufficient income to obtain a mortgage, home equity loan or line of credit and you or your spouse is at least 62 years old, you can take equity out of your home through a reverse mortgage. With a reverse mortgage, you access the equity in your home through a one-time or monthly tax-free disbursements or by drawing down a line credit. You do not make monthly payments on a reverse mortgage but your loan balance increases over time so it involves certain risks. We provide a comprehensive Overview of a Reverse Mortgage on FREEandCLEAR.

There are additional financing options if you do not generate meaningful income from traditional sources such as a job but you have significant assets such as cash or liquid investments. An asset depletion mortgage enables borrowers to use liquid assets to qualify for a mortgage. Examples of asset depletion mortgage borrowers include self-employed, retired or almost retired or wealthy borrowers. We also provide a thorough overview of Asset Depletion Mortgages on FREEandCLEAR.

Asset depletion mortgages are typically provided by portfolio lenders. Portfolio lender have the ability to keep your mortgage on their books instead of selling it, which enables them to offer loans that other lenders cannot. Portfolio lenders are usually large banks with both mortgage lending and private banking or brokerage operations. Examples of portfolio lenders include First Republic, Boston Private, Citibank and Chase, among others.

Even if you do not qualify for an asset depletion mortgage, some portfolio lenders may be willing to provide a mortgage, home equity loan or line of credit if you open a new bank or brokerage account with a significant amount of money.

As you can see there are multiple options for accessing the equity in your home and the right financing option depends on your personal financial profile and objectives. We provide an overview of the Ways to Take Cash Out of Your Home including the pros and cons for each financing option. After reviewing these options and assessing your financial situation, including your monthly income, debt and credit score, you can determine the financing approach that is right for you.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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