Some homeowners refinance their mortgage as a strategy to bolster their retirement funds, either by reducing monthly payments or accessing home equity.

Advantages:

• Lower monthly payments can free up funds for other retirement expenses.
• Downsizing or moving to a retirement community can be easier with lower payments.
• Home Equity Conversion Mortgages (HECM) allow you to access the equity in your home as a form of income during retirement.

Disadvantages:

• Refinancing may come with significant closing costs that could offset potential savings.
• It could lengthen the term of your loan, potentially preventing you from paying it off before you pass and reducing your ability to leave the home as an inheritance.
• Other options, such as a HECM, might be more beneficial than traditional refinancing.

Types of Loans for Retirement Income:

• HECM Home Loan: This loan allows you to access your home’s equity without monthly payments, which can help cover living expenses.
• HECM For Purchase: This combines the ability to purchase a new home with a reverse mortgage.