As more Baby Boomers head for retirement and look for either downsizing into a smaller home or refinancing their existing homes, there are some unique refinancing programs to take advantage of. Whether your goal is to take out a new mortgage for a smaller home or refinance your existing mortgage to save money, there are some things you need to know to refinance.
Here are some of the things you need to know about refi programs for seniors.
Get Financially Prepared
Refinancing a mortgage, even later in life, will require very much the same things that a new mortgage would in terms of income history, credit, and other financials to prove your worthiness as a borrower. For that reason, make sure you’re financially prepared when the time comes to approach your lender about refinancing.
Where seniors often differ from first-time homebuyers is in the income category. As a wage-earning worker, you likely had no problems finding documentation to prove your regular income and expenses, but as a senior, these sources of income change. It’s important that you gather any and all information pertaining to your income including social security, retirement, pensions, and any distributions from 401k and IRA accounts.
Create Appeal with Your Current Home
When it comes to refinancing your mortgage, there may be ways you can add value and therefore increase the overall equity you have in your home. In many ways, this can be as simple as improving the curb appeal of your home to appraisers. To do so, consider adding landscaping or repainting and rehabilitating the exterior of your home.
Additionally, over the years you’ve likely put in a great deal of work improving your home. Make a list of those improvements, the value of those improvements, and make a case for how much value that’s added to the home. These things, while potentially small, can add up to big value over time.
Understanding Refinancing Options
There are many refinancing options available to seniors, and some are rather unique and can only be taken advantage of later in life. Here are some of the top ways seniors can refinance their homes.
Rate and Term – Traditional rate and term mortgages can help lower your interest rate and reduce the overall term of your mortgage therefore saving you significant money in the years to come.
Cash-Out Refinance – Cash-out refinancing is popular among seniors and those looking to make home improvements. With a cash-out refi, you can actually take out more money than the value of the home with which you can make needed improvements or use the funds for other necessary home expenses.
Reverse Mortgage – A reverse mortgage is unique to seniors over 62. Reverse mortgages leverage the equity you already have in your home and convert it to a source of income. Your lender will pay you in either installments or in a lump sum. You still own the home and remain on the title, but you can use the funds for living expenses just as you would regular income.
Home Equity Loan – A home equity loan is similar to a reverse mortgage but allows you to take a disbursement based on the equity you have in your home. This money must be repaid to your lender monthly, so be sure you can absorb both your original loan payment as well as your home equity payment.
To learn more about refinancing options for seniors, then get in touch with Tidewater Mortgage Services, Inc. Tidewater has over 2 decades of experience helping homeowners buy and refinance homes!