Refinance vs Reverse Mortgage? Retirement Planning with a reverse mortgage

Refinance vs Reverse Mortgage? Since 2004 I have been fortunate to help people finance their homes. It has always puzzled me why people chase a lower interest rate. Then yesterday at coffee with a friend, it hit me. My friend said as he ordered his coffee, I caved into marketing. That is, he ordered something different than he normally does because of the marketing.

Homeowners do this every day. When news comes out about lower interest rates, they refinance to a lower rate, and save money each month. They normally roll in the costs of the refinance into the loan, and often break even in 1-2 years thinking they are ahead. What they don’t realize is they have reset the loan term back to (usually) 30 years. So, in effect they have forfeited the number of years they have already paid into their mortgage. Are they really ahead?

This catches up to them when they want to stop working or work less and still have a mandatory monthly mortgage payment. 68% of senior homeowners enter retirement with a mortgage, an all time high. The largest expense in a seniors budget is the mortgage payment. For those who qualify, we can show them how to transfer the burden of repayment from the homeowner to the home. I would love to show you how we do this!

Kevin A. Guttman Reverse Mortgage Specialist