Seniors-Unlock Your Financial Potential

A FAVORABLE REFINANCE

Refinancing a mortgage can be a smart financial move for adults looking to reduce their monthly payments, secure a lower interest rate, or change the terms of their loan to better fit their financial situation.  If done effectively, refinancing allows seniors to have more disposable income for daily expenses or savings.  It can also be an opportunity to switch from an adjustable-rate mortgage, providing more stability and predictability in their financial planning.

BEST FINANCING OPTIONS FOR SENIORS

The best financing option for seniors depends on their specific needs, goals, and financial situations.  With many variables at play, it is essential to consult with a licensed wealth management advisor to make informed decisions.  However, understanding popular financing options for seniors will help guide you in the right direction.

• CONVENTIONAL MORTGAGE          A conventional mortgage might be the best option for seniors with a steady income and a good credit score.  This type of loan typically offers lower interest rates and more favorable terms than other types of financing.  It can be used to purchase a new home, refinance an existing mortgage, or access home equity for other financial needs.
• CASH-OUT REFINANCING          A cash-out refinance creates a new mortgage for clients, allowing them to take out the remaining home equity in cash – often with better terms than their original mortgage.  This option is ideal for older adults looking to consolidate debt, secure lower interest rates, reduce monthly payments, and have extra cash available for expenses.  However, because this process reduces existing equity, it increases your debt-to-income ratio and can impact future loan eligibility.
• HOME EQUITY CONVERSION MORTGAGE (HECM)          A Home Equity Conversion Mortgage, also known as a Reverse Mortgage, allows homeowners ages 62+ to convert part of their home equity into cash without selling their home and paying additional monthly bills.  This option can provide seniors with a steady stream of income, which can be particularly beneficial for those who need additional funds for living expenses or medical bills.
• HOME EQUITY LINE OF CREDIT (HELOC)          A HELOC is a revolving line of credit that uses the borrower’s home as collateral.  This option allows seniors to borrow money as needed and pay interest only on the amount they use.  It can be a flexible, cost-effective way to access home equity for various expenses, including home improvements, medical bills or other financial needs.

While having a mortgage in retirement might seem ill advised, there are scenarios in which it can be a beneficial financial strategy for seniors.  By understanding which home financing might make sense and the options available for seniors, get the help of a trusted financial advisor to make decisions that align with your financial goals and needs.

From The SRES Professional – Home Financing:  The Options for Seniors  July/August 2024