ACCORDING TO MY local newspaper, the average home price in my town rose 450% over the past 25 years. That made me ponder how I could use my home equity to fund my desired retirement lifestyle. I’m certainly not alone in thinking this way.
There are three ways you can access home equity. You can sell your home and downsize, you can take out a home equity line of credit or you can take out a reverse mortgage.

THE HIGHEST CREDIT score possible is 850, and I’ve hit that mark in eight of the past 12 months. In the other four months, I had a score of either 844 or 846 under the credit rating formula created by FICO, formerly called Fair Isaac Corp.
A FICO score between 800 and 850 is considered exceptional and gets you the best rates on loans. A score of 670 or more is considered “good,” but more doors and opportunities are available when your score hits 740,

IF YOU’RE LIKE MANY people, you’ll cringe when I mention reverse mortgages. The perception is that they’re loans of last resort for desperate retirees who don’t have any other options. But I suggest keeping an open mind. I believe reverse mortgages can be a shrewd way to unlock liquidity during retirement.
Reverse mortgages have evolved significantly, and retirees are often pleasantly surprised when they learn how today’s loans work. They find that many of the negatives they’ve heard are no longer true.

WE NEEDED MONEY to close on a new home. The mortgage process progressed smoothly—until the underwriters suddenly rejected the property right before closing. To get together the money needed to close, my wife and I had to resort to loan sharks—ourselves.
We borrowed from our IRAs. The rules allow tax-free distributions for either a 60-day rollover to a new IRA or reinvestment back into the same IRA. When we called Vanguard Group to execute our “rollovers,” the phone reps were well-versed on this short-term,

BUY NOW PAY LATER is an online payment method that’s growing in popularity. Money and investors have moved toward participating companies big and small, as they seek to stake their claim in this growing market. What’s the big deal and why is everyone excited?
Buy Now Pay Later (BNPL) allows consumers to purchase goods and pay for them in the future. Approval happens in seconds. You make a down payment, such as 25% of the total purchase,

I HAD A NEW HOME built in 2017. I financed it with a 30-year mortgage at a 3.875% interest rate.
Early last year, when interest rates dropped due to the pandemic, I suggested that readers refinance. I took my own advice, replacing my 30-year loan with a 15-year mortgage at 2.99%. The cost of refinancing seemed well worth the reduction in my loan interest rate.
Two months ago, I saw that mortgage rates had continued to decline,

WHAT’S YOUR CREDIT score? That’s hard to answer because none of us has just one. You likely have a dozen or more. So how did consumers come to think that one credit score—the FICO score—is the sole reflection of their ability to repay a loan?
Following decades of growing consumer spending, and associated data collection, the Fair Credit Reporting Act of 1970 required credit bureaus to open their files. The intent was to protect consumers from lenders who were relying on incorrect information.

FINANCIAL FIRMS spend heavily on marketing to create a friendly, customer-first impression. But these firms aren’t your friends, at least not in the ordinary sense of the word. They make their money, fairly and legally, by providing specific services to customers.
Friendliness at a retail level keeps your capital in place, where it works for the firm’s benefit. Every once in a while, I see language that clearly expresses what they want from our “relationship.” These communications help me review where I do business,

QUITTING CREDIT CARDS might be more difficult than quitting cigarettes. I’ve done both. I’ve not smoked in 36 years. But it wasn’t until 11 months ago that I stopped charging on my credit cards.
I got my first card at age 15 from the biggest department store in my hometown. It was 1971, and my card’s limit was $50. The store was locally owned, so perhaps it was easier to obtain credit as a minor without steady income.

I HATE DEBT. A very happy day was when we paid off the mortgage. I’d rather walk on broken glass than pay a penny of interest on my credit cards. But there have been a few exceptions to my usual rule, all involving car purchases.
The first was many years ago when I reached what I thought was an all-cash deal on a new car. The salesman surprised me when he offered the same price with 0% financing.

IT’S BEEN MORE THAN three years since my wife and I paid off the last of our consumer debt. Since then, we’ve enjoyed the benefits of a debt-free life: less stress, no interest payments and a lower cost of living.
While these reasons alone make a strong case for paying off credit card balances, car loans and other consumer debt, the true cost of borrowing goes beyond the obvious. Here are five drawbacks that I wish I’d considered before taking on debt:
1.

MY WIFE AND I BOUGHT our first home in the mid-1980s. We were thrilled to get an 8% mortgage, though we had to pay three points—an upfront fee equal to 3% of the loan amount—to get that rate. Many of our friends had bought a few years earlier and were paying 14%, a common occurrence back then, according to Freddie Mac data.
We kept our eyes open for opportunities to refinance our high rate.

DECIDING WHETHER to buy bonds or pay down the mortgage used to be a tricky decision. Not anymore: Paying extra on your home loan will almost always be the right choice.
This takes some explaining—because it involves wrapping your head around the standard vs. itemized deduction, investment taxes, and a mortgage’s shifting mix of principal and interest.
First, let’s dispense with the obvious objection: Yes, if you’re inclined to buy stocks rather than pay down the mortgage,

THE GREAT RECESSION highlighted the frightening amount of debt—especially mortgage debt—that had been taken on by many American families.
A decade later, the picture is far brighter, with one exception: student loans. Since 2008’s third quarter, education debt has ballooned 144%, according to data just released by the Federal Reserve Bank of New York. But the total of all other debt—mortgages, car loans and credit card balances—is up less than 1% over the same period.

THE ABOVE HEADLINE overpromises, I readily admit. Still, three considerations—taxes, risk and the economic cycle—point to one conclusion: Paying down debt in 2018 looks like an awfully smart move.
Debtors’ prison. Ridding yourself of debt, even mortgage debt, has long been a savvy alternative to buying bonds and certificates of deposit. But thanks to the new tax law, it looks especially savvy right now—and especially if you’re married.
How come? The new tax law took away personal exemptions but compensated by roughly doubling the size of the standard deduction.