Showing posts with label Refinance Your Home. Show all posts
Showing posts with label Refinance Your Home. Show all posts

Tuesday, July 14, 2020

4 Factors in Deciding to Refinance Your Home Before Retirement

As retirement is looming, an idea to refinance your home might be lingering on your mind. You can make the right move using some strategies that will ensure that you remain financially stable. 

Please have a look at the factors that will help you decide whether the idea is viable or not.

Current Interest Rate

If you can lower the current interest rate by 1% or more, mortgage refinancing will be successful. It will make sense since you can pay the loan within a short time. In addition to that, you can build your home’s equity seamlessly with the payment rates. 

If the remaining balance is quite high and you can get a 2-3% reduction on interest, you can go ahead and refinance your home.

Total Refinancing Costs

The cost of refinancing will also play a pivotal role as you make a life-changing decision. Usually, you will cater for closing costs just like you did when you took the initial mortgage. On that account, you have to calculate the expenses to see whether they will favor you or not. 

For example, if you save about $100 per month and the closing costs are $5,000, it will take you roughly 50 months to break even. The need to refinance the loan doesn’t make sense at this point if you intend to move out of your house.


To qualify for the loan, you need to have a stable income and a positive credit score. Therefore, you should look at your financial status to ascertain whether you will get the loan or not. The new underwriting process will dig deep into our cash flow and credit status. It will also look at your home equity concerning the amount that you have.

How Long you will Stay in your home

If you don’t intend to sell the house or move out, there is no need to refinance. It will take many years to clear the debt so that you can start saving again. On that account, you should only take action if you will continue living in your current home. With low-interest rates, you can repay the debt faster and start enjoying the golden years.

Subsequently, refinancing your home is an excellent idea if you can get a lower rate to pay off the loan. Your income, credit score, and home equity play a crucial role as well. Plus, you can benefit from the strategy if you don’t have intentions to sell it.

Thursday, September 1, 2016

Does It Make Sense to Refinance Your Home in Your 50s?

There may be many advantages to refinancing a home loan. You could get a lower interest rate or even cash out your equity. 

However, if you are 50 or older, does it make sense to refinance your mortgage when retirement may be just around the corner? 

Can You Lower Your Interest Rate?

According to the experts at Republic State Mortgage Co, most people refinance to lower monthly payments or even shorten the terms of their loan. If you took out your mortgage before the Great Recession of 2008, you should certainly refinance your loan. 

You could save hundreds or even thousands of dollars per month that can be put into your 401k, IRA or other long-term investments. 

Even if you reduce your interest rate by a point or two compared to what it was when you borrowed the money, that point can still represent a significant savings. 

Are You Paying Mortgage Insurance?

A bankruptcy, low income or other circumstances could have put you in a position where you could only qualify for an FHA or similar home loan. 

FHA loans typically require you to pay mortgage insurance, which may add hundreds of dollars to your loan payment each month. If you have sufficient equity, you should refinance and get rid of that burden. 

Will Cashing Out Equity Help Your Financial Situation?

Taking out a second mortgage may help you consolidate credit card or other debt at an interest rate similar to that of your original mortgage. However, losing equity in your home could make it harder to sell if you wanted to downsize in the future. 

Therefore, you should project how much it would cost to pay off other debts under their current repayment terms compared to what it would cost to pay your mortgage for an additional 10, 20 or 30 years.

You Want to Pay Your Loan Before Retirement

Ideally, you will pay off your mortgage before you retire, or have it mostly paid down when you hit retirement age. If you decide to refinance your mortgage, make sure that you don't significantly increase your loan's term. 

Otherwise, you could be using money that you need for health care or other expenses in retirement to pay down a mortgage you could have completely paid off already if you resist the urge to refinance.

Should you refinance your home after you turn 50? That depends on your unique financial situation. However, if you think that refinancing can save money that will be used to fund a retirement account or otherwise help secure your financial future, it may be a strategy worth considering.

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