Saving for retirement is a challenge for most Americans. One helpful step that is often overlooked is to refinance your home mortgage. How does refinancing help you prepare for a better and more secure retirement? Here are five key ways.
1. You Can Set a Payoff Date
Homeowners who refinance in today's market can choose a term length that works best for them. So if you have 15 years before you hope to retire, you may refinance with a 15-year loan and have the home paid off just when you step back from the working world. Then, you can enter retirement with no mortgage.
2. You Can Take a Lump Sum
If you can afford your current monthly payment, you might consider using a cash-out refinance to take out some of the equity in your home rather than opt for a lower payment. Use this equity to jump-start your retirement savings in a big way. And it will have more time to grow before you retire.
3. You Can Put More In Savings
Of course, one of the most popular ways to use a refinance is to get a lower payment. By refinancing just what you now owe, you can often save hundreds of dollars each month. You may also be able to get rid of mandatory mortgage insurance for more savings. That lower monthly obligation allows you to boost the amount you set aside for retirement each month.
4. You Can Pay Less In Retirement
If you expect to carry your mortgage into retirement, refinancing will lower it as much as possible. Even if you don't need the extra budget room now, this gives you the most options once you stop working and start living on a fixed income.
5. You Can Get the Best Deal
The advantage of completing a mortgage refinance during your peak earning years is that you're in the best position for qualifying. You may be able to secure the lowest interest rate, the highest loan amount, and the easiest process because you're an attractive borrower. If you wait to refinance for a lower payment after you retire, you'll likely have a much harder time.
Where to Start
No matter where you are in the process of saving for retirement, the best place to start is to learn more about refinancing options. Whether you want to boost retirement contributions, create an easier budget, or take out cash for savings, a mortgage loan exists for you. Consult with a loan agent today to get answers to your questions about refinancing home loans.