ArcaMax

Q: I am 85 years old and my wife is a tad younger. A couple of years ago we paid off our mortgage with a home equity line of credit (HELOC). The loan amount was around $100,000. The HELOC loan is interest only with a payment of around $400 per month. We had been paying around $700. Our loan is a variable rate loan, and the payments have continued to go up and now are around what we were paying with our old loan. Can you suggest any way of lowering our monthly outlay?

A: Well, we’re not quite sure what you can do. You swapped a fixed rate mortgage for a loan that is now interest only and has a variable interest rate. You got a benefit of the lower interest rate and saved a bit of money when your loan payment was less than your prior loan. But it doesn’t sound as though you used your savings to pay down your mortgage. Now, however, you’re paying the price for the variable interest rate with higher payments that also don’t pay down your mortgage balance.

What we don’t know is if your $700 payment on your old loan included your taxes and insurance. We’ll assume that it didn’t and that it was for your principal and interest payment on that loan. So, the one thing you had going for you with your old loan was that you were paying down your debt with each payment.

We don’t know how far you were into the term of your fixed rate loan, but we suspect that you were well into it and were likely paying a good chunk each month of your payment to pay down the balance you owed. Unfortunately, your HELOC loan is interest only; so when you took out your $100,000 loan, your loan balance has not declined.

You didn’t mention the rate you have on your loan. And, interest rates are fairly high at the moment. But you might want to investigate to see if there are other loan options available to you. Perhaps, a different lender has a HELOC loan that may give you a lower rate. You might consider a 10-year adjustable-rate loan if the loan interest rate and loan payment would be beneficial.

Still, we don’t see many good options. Even a 10-year fixed rate loan will cost money. When you apply and go through the loan process, you’re likely going to spend a fair amount. You’d have to assess if the cost of a new loan outweighs the amount you are paying on the HELOC loan.

You need to sit down and go through your loan numbers to understand what your current payment is compared to a new payment. Is your credit score high enough to qualify for a good loan? If your credit score isn’t above 760, it’s unlikely you’ll get access to the best interest rates available.

You might think about a reverse mortgage. If you have enough equity, you could take out a reverse mortgage, pay off your home equity line of credit and then just continue to pay your insurance and property taxes. Reverse mortgages are good, but very expensive compared to other ways to access the equity in your home.

For example, you might consider an equity sharing arrangement with a company like HomeTap or Unlock Technologies. These companies will allow to cash out some of your equity, and then not pay it back until the home is sold. They’re not lenders. They are making an investment in your home. If your home is worth $400,000 and they give you $100,000, they are taking a 25% stake in your home. When you sell, you will need to give them 25% of the sales price of the home.

Finally, you may be ready to sell your home. This would give you cash to move to a rental that might not only be less expensive, but would allow you to live more comfortably as you age.

Please look carefully at all of your options before making your next move.

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(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, a financial wellness technology company. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)

©2025 Ilyce R. Glink and Samuel J. Tamkin. Distributed by Tribune Content Agency, LLC.