If you will need cash in retirement, refinancing your home might be the best way to raise it, says Bradley Clark, a financial adviser in Andover, Massachusetts. Or, if you already have enough to get through retirement, you can use cash raised by refinancing to add to your investments.
There's no age limit when it comes to getting or refinancing a mortgage. Thanks to the Equal Credit Opportunity Act, seniors have every right to fair and equal treatment from lenders.
The number one downside to refinancing is that it costs money. What you're doing is taking out a new mortgage to pay off the old one - so you'll have to pay most of the same closing costs you did when you first bought the home, including origination fees, title insurance, application fees and closing fees.
A Longer Break-Even Period
One of the first reasons to avoid refinancing is that it takes too much time for you to recoup the new loan's closing costs. This time is known as the break-even period or the number of months to reach the point when you start saving.
When it comes to refinancing, a general rule of thumb is that you should have at least a 20 percent equity in the property. However, if your equity is less than 20 percent, and if you have a good credit rating, you may be able to refinance anyway.
Can you get a 30-year home loan as a senior? First, if you have the means, no age is too old to buy or refinance a house. The Equal Credit Opportunity Act prohibits lenders from blocking or discouraging anyone from a mortgage based on age. ... The qualifying criteria remain the same: income, assets, debts, and credit.
401(k) Investments
Because a 401(k) account is your personal investment, most lenders will allow you to use these assets as proof of reserves.
If one of your refinancing goals is to lower your payments, stretching out the loan term can lighten your financial burden each month. ... If you refinance the remaining $182,000 for another 30 year term at 4%, your payments would drop about $245 a month, but you'd end up paying more interest.
The average retiree spends $16,723 per year on housing. That figure includes rent or mortgage payments, insurance, and, if applicable, property taxes, maintenance, and repairs. It doesn't include utilities like heat, electricity, and water, nor does it include household amenities like cable and internet service.
Is it worth refinancing for 1 percent? Refinancing for a 1 percent lower rate is often worth it. One percent is a significant rate drop, and will generate meaningful monthly savings in most cases. For example, dropping your rate 1 percent — from 3.75% to 2.75% — could save you $250 per month on a $250,000 loan.
Taking on new debt typically causes your credit score to dip, but because refinancing replaces an existing loan with another of roughly the same amount, its impact on your credit score is minimal.
Can I Lower My Mortgage Interest Rate Without Refinancing?
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