Financial Tips

Refinancing my mortgage

By
on
May 22, 2019

Q: Is it advisable to refinance my mortgage as part of my retirement planning?

A: Refinancing your mortgage can have a big impact on your finances. That’s why it’s important to consider all angles before deciding if a pre-retirement refinance is right for you.

First, you need to know that refinancing doesn’t come cheap. It’s only worth the cost if you come out ahead.

Second, consider how long you plan on staying in your home. A refinance is only recommended if you plan on living in your home for at least 10 more years. Otherwise, it’s unlikely you’ll recoup its cost.

Another important issue to weigh is the significant tax savings homeowners typically believe a mortgage affords them. While this is sometimes true, it is rarely the case for those who are nearing retirement. Homeowners are offered tax deductions on the interest of their mortgage payments. However, toward the end of a mortgage’s life, most of the monthly payment goes toward the principal of the loan and not toward interest. This makes the tax savings from an older mortgage minimal.

Next, understand that there are a few different ways to refinance, only some of which make sense for a pre-retirement homeowner. Here are the three primary ways to refinance a mortgage:

  • Lengthening an existing loan into a new 30-year mortgage
  • Refinancing a loan to one with a lower interest rate
  • Shortening the life of a loan to a new 10- or 15-year mortgage.

While the second two options provide you with several long-term benefits, it is rarely a good idea to refinance a mortgage to a lengthier loan just before retirement. Doing so can mean leaving your heirs with a mortgage to pay off after you pass on. It can also lead you retire with debt.

However, a pre-retirement refinance to a lower-interest mortgage, one with a shorter life or a loan that offers both advantages, is often a smart step to take.  Here are just a few reasons to consider this kind of refinance before you retire:

1. Extra cash flow:

By switching to a loan with a lower interest rate, you’ll find yourself with significant monthly savings that can help you live out the rest of your years in financial independence.

2. Retire debt-free:

If you have more than a decade before retirement, refinancing a 30-year mortgage into a 15-year mortgage can allow you to retire completely debt-free.

3. Pay off other high-interest debts:

For homeowners carrying high levels of credit card or other debt, refinancing to a lower-interest loan may be an easy way for them to come up with extra cash to pay off a high-interest balance.

It is always important to speak to a professional tax adviser, retirement specialist, Family Attorney, etc. to know what works best for your personal situation.

Call, click or stop by the Taunton Federal Credit today to ask about your refinancing options.

  • SOURCES:
  • https://www.google.com/amp/s/www.bankrate.com/finance/refinance/decide-whether-to-refibefore- you-retire.aspx/amp/
  • https://www.google.com/amp/s/www.hsh.com/amp/finance/refinance/should-I-refinancebefore- I-retire.html
  • https://www.google.com/amp/s/www.fool.com/amp/investing/general/2015/04/03/retirewith- your-mortgage-or-refinance.aspx
  • https://www.google.com/amp/s/www.forbes.com/sites/learnvest/2014/02/05/7-pros-andcons- to-refinancing-before-retirement/amp/
TAGS
RELATED POSTS

February 19, 2020

Quick-what’s your credit score?

February 12, 2020

Fake Check Scams!

February 5, 2020

LEAVE A COMMENT

Banking Made Easy

At TFCU, we are committed to offering an extensive range of products and services designed specifically with you in mind! We want to make your banking experience as easy as possible by giving you convenient access to manage your accounts on the go, all while providing you with the latest and greatest banking technology.

In addition to banking products & services, TFCU has several affiliate companies known as Credit Union Service Organizations! These companies allow us to offer Insurance Services, Financial Services & Real Estate Services to our members.

TFCU membership is available to anyone who lives, works, worships or attends school in Bristol County, Massachusetts; Bristol, Kent, Newport and Providence counties in Rhode Island; and the Rhode Island towns of Charlestown, Exeter, Hopkinton, Narragansett, New Shoreham, North Kingstown, Richmond and South Kingstown. Membership is also open to immediate family members of existing members.

Instagram
  • We visited @therealdonutfactory in New Bedford earlier today to perform random acts of kindness to finish out our week! 
Make sure you check them out for delicious donuts and try their X-Factor coffee! 
#TFCUStreetTeam #TFCUGives
  • Today as part of our Random Acts of Kindness, we stopped by Forrest's Family Fun Center "Skating" and handed out some gift cards to guests to use towards skating, gaming and concessions! 
#TFCUStreetTeam #TFCUGives
  • Some of our Street Team Members walked around @trucchissupermarket in Middleboro earlier and handed out Trucchi’s gift cards to shoppers as part of our Random Acts of Kindness Week! 
We’ll be back out tomorrow in Taunton so stay tuned! 
#TFCUStreetTeam #tfcugives
  • We stopped by Stephanie’s in Downtown Taunton and handed out some gift cards to the guests inside to help pay for their lunches! 
Stephanie’s is located on Main Street and serves breakfast and lunch along with a full coffee bar. If you haven’t been stop in and check it out! 
#tfcustreetteam #tfcugives
  • It’s National Random Acts Of Kindness Day! 
Starting tomorrow, our #TFCUStreetTeam will be hitting the streets of our communities performing random acts of kindness! Keep an eye out to see where we end up! 
In the mean time, what’s something kind you’ve done for someone today? Did you witness a random act of kindness? Let us know in the comments!

#nationalrandomactsofkindnessday #randomactsofkindness
  • Have a Happy Presidents Day!

Follow Me!