Refinance And Retire With A Sound Strategy

When some people think about retirement planning, they are often married to the idea that it’s best to retire with your home loan paid off. But is that always an option for home owners at or near retirement age? Sometimes it’s not only a good idea to consider refinancing a mortgage using a conventional or FHA refinance loan, it may be the best idea even if age 65 is looming.

Borrowers who purchased a home with an adjustable rate mortgage (an ARM loan for short) may do well to refinance a home loan for no other reason than to get out of the ARM, depending on how much time is left on that mortgage.

For many people, retirement means living on a more or less fixed income. And that can mean refinancing out of an adjustable rate mortgage makes sense. Why?

Building in more predictability into your mortgage loan payments is a valuable thing even for those who do not have a fixed income or a retirement budget to worry about. Recent fluctuations in mortgage loan interest rates shows how much payments on an ARM could change depending on the terms of your loan.

Some borrowers apply for an adjustable rate mortgage loan with a strategy--they are thinking specifically about refinancing the loan once the teaser rate expires. Others may not be thinking quite so long-term when they close the deal on an ARM, but later wonder if refinancing into a fixed-rate mortgage is the right move even if it will extend the amount of time they have to pay on the loan.

Another approach is to take the strategy of refinancing from one ARM to another in order to get into a new teaser rate. The idea of moving into a lower or more predictable mortgage loan payment into retirement is definitely a sound concept if you need to make your payments predictable in later years. All of this depends greatly on the financial needs and goals of the borrower, so review these options carefully--ask a lot of questions and make the most informed choice you can.

Rate this item
(1 Vote)

Top Reads This Month

  • FHA Refinance Loans and Interest Rates

    FHA mortgage loan rates and refinance loan rates stayed well below the 4 percent zone in the last days of the year--now that the new year is here, borrowers may not be sure how long the best-execution FHA mortgage loan interest rates reported at the end of the year may last. Do you know whether your’re ready to commit to…