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Home Refinance As A Senior

Seniors look into refinancing their homes for many reasons. Travel, medical expenses, buying that fishing boat they’ve always wanted, or just having extra money for leisure activities is often what occupies a senior’s mind. As good as the dreams may be, seniors need to take a good hard look around. A few things have changed, but there are ways around that.

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How Long Will Seniors Be In the Home?

When considering if they should refinance their home as a senior, they should think out how long they intend to stay in the house. Why would seniors take out a fifteen year mortgage on a house they intend to sell in five to ten years?

The life of the loan should be taken into account as well. If the senior’s mortgage only has six years left, it wouldn’t make sense to get a new fifteen year mortgage. Even if the payment is lower, seniors will be paying more on the loan.

If senior homeowners want to refinance, they should look for a mortgage closest to the amount they have left to pay. However, if the problem is just a cash flow problem, there are ways around that:

  • Mortgage Loan Modification Program. Seniors whose homes have been hit with disastrous storms or other natural disasters have recourse to loan modification programs. These offer lower interest than previous loans, plus part of the loan could be forgiven. The paperwork is outrageous, but that’s a small price to pay for a refinance – senior.
  • Reverse Mortgage. This is when the lender pays the senior out of the equity in the house. Some reverse mortgages are up to 30 years. The paperwork, however, will cost seniors a hefty chunk of change. They should inquire into the fees when they ask for information.
  • Home Equity Conversion Mortgage. This is the same as a reverse mortgage, only with federal help. HUD will work with seniors to figure out the best plan of action. It won’t cost an arm and a leg, either.


Changes in Lending

Homeowners wondering if they should refinance their home as a senior should know how the world of money lending has changed. When the bottom fell out of the housing market, things tightened up. Seniors with good credit, good investments, as well as savings have a head start.

Lenders are making do with a lesser income to debt ratio. They are also cracking down on the self-employed and those without trackable sources of income, such as those living on their savings.

Elder borrowers should know how they are viewed by lenders. Keeping credit in good shape in addition to having verifiable income makes lenders look more kindly on senior borrowers.

Should I refinance my home as a senior? By all means, as long as seniors make sure they’re not paying longer and more than the life of their loan. Go ahead, as long as seniors don’t move out before the mortgage is paid off. Ask questions to ensure they get the best deal possible.

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