If you've been out of the paid workforce for a while and receive Social Security Disability (SSD) or Supplemental Security Income (SSI) benefits in lieu of income, you may occasionally find yourself in a cash crunch when a large expense unexpectedly hits your bank account. Repairing a roof, replacing a car, and other occasional necessary expenses can require a surplus you may not have available. However, because SSD and SSI benefits are generally exempt from garnishment by creditors, it can be difficult to qualify for a loan when your only source of income is essentially untouchable. What are some lending options that can get you access to cash when you need it? Read on to learn more about the financing choices available to you if your only income is SSD.
If you own your home free and clear or owe only a little on the mortgage principal, and believe this is the last home you'll ever want to own, you may qualify for a reverse mortgage. Because a reverse mortgage is based on the equity in your home, and designed for adults who have retired or left the workforce and find themselves in need of cash, there are essentially no income requirements.
You can opt to have the equity in your home paid out in a lump sum, or get a monthly "mortgage payment" from your lender. In exchange for this money, your lender will take the title to your home after you die or enter an assisted living facility. There are some age-related restrictions on who can take out a reverse mortgage -- generally, you'll need to be age 62 or older. However, if your spouse is older than you, he or she may be able to take out a reverse mortgage in his or her own name before you'd otherwise qualify.
Home equity loans
Another option for quick cash with little income verification is a home equity loan (HEL) or line of credit (HELOC). Like reverse mortgages, HELs and HELOCs allow you to borrow against the equity in your home, therefore requiring little in the way of income verification. If you were to default on a HEL or HELOC, the lender would be able to foreclose your home and sell it for more than the amount of the loan -- eliminating any need to garnish your bank accounts, and allowing the lender to offer you a competitive interest rate.
If you receive a lump sum through a HEL, you'll be required to make minimum monthly payments for the term of the loan. If any balance remains after the term of the loan has expired, this will be rolled into the mortgage on your home as a second mortgage. If you have a HELOC instead, you'll be able to make charges or take out cash as frequently or infrequently as you wish. If there is a balance on your account during a billing cycle, you'll be assessed a minimum payment; if no balance exists, no payment is due. Like HELs, any balance remaining after the term of the loan will be rolled into a second mortgage with a fixed interest payment.
If you own a paid-off vehicle, you may be able to take out a title loan, receiving a portion of your vehicle's book value in cash in exchange for the title of your vehicle. If you fail to repay or renew the loan in time, the lender will take physical possession of your vehicle, selling it to pay off the loan. Once you repay your loan, you'll be given back your title and will once again own your vehicle free and clear.
Although title loans often have higher interest rates than other types of loans, because of their fast approval process, they can be a good option for those in need of quick cash. Applying for a reverse mortgage, HEL, or HELOC and being approved to receive funds can take weeks or even months -- meanwhile, when taking out a title loan, you'll often be able to receive cash in your bank account the day after you apply. This can give you the cash needed to make a sudden purchase or payment before your SSD funds have hit your account.
For more about this topic, contact a social security attorney in your area.
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