CNN Money: “Tap The Home” to Protect A Pension

Are you thinking about a cash-out refinancing loan? Consider the advice of one article published at CNN Money. An article by Sarah Max titled, “Couple copes with the potential loss of their pension” tells the story of a couple worried about their retirement plans due to a “pending acquisition” of the husband’s employer.

According to the Sarah Max article, the husband “had been on track to get $5,000 a month from the pension starting at age 60. If the new owner scraps the plan—a likely scenario—he'll gross $3,000.” Max writes that one option does exist to protect the pension plan; pay nearly $50k for “extra service credits and start getting checks at 55, while still working.”

Is this a viable option? One financial expert interviewed by Max says “it’s a no-brainer” and one of the possible ways to raise the funds to do this include a cash-out refinancing loan.

The article says the couple “should qualify for a cash-out refinance that would allow them to buy the credits and consolidate $14,000 in higher-interest RV and home-equity loans.”                                     
Such a course of action is greatly dependent on a borrower’s personal circumstances, their goals and financial needs, but it’s one creative use for a cash-out refinance that some might overlook when considering their financial options.

Borrowers in a similar situation should take a careful look at their current debt-to income ratio, their financial goals, even their possible anticipated debt load later down the road. Will a child’s student loans or other costs factor into your financial future? These are all things to give serious thinking time to when contemplating financial strategy.

A cash-out refinance, whether it’s via FHA, VA loan, or conventional loan program might be the solution in a situation like the one described in the article by Sarah Max. The question it right for YOU? The only way to tell is to run the numbers and figure out your best course of action.

Rate this item
(1 Vote)