Mailbag Monday: Refinancing in Retirement
I am having trouble refinancing my mortgage. I am a 78-year-old widow and retired. The mortgage company says that they will not refinance me because I don’t have an income. This is the same mortgage company that has my current mortgage. How can I get around this and refinance?
— Sylvia
Sylvia, thanks for writing. This is a challenge, unfortunately, because even if you have retirement savings, and you’re drawing a steady income from those accounts each month, lenders don’t really see that as something they can count on because your investments could fluctuate so substantially. What that means is you have to cast a wide net and hope for the best – go to local banks, credit unions, lenders who keep the loans in their own portfolio rather than selling them, and mortgage brokers and see what you find.
If you come up short, you can effectively “refinance” your loan yourself by throwing additional money at it each month. That additional payment, even just $50 a month, will lower the cost of interest you pay overall, serving a similar purpose as cutting your interest rate. Of course, this strategy only works if you are refinancing to lower your interest rate and not to open up more cash flow each month – but even still, it’s worth a mention of you have wiggle room in your budget.
And I’m going to use this as a PSA to the rest of my readers: If you’re nearing retirement, and thinking you might want to refinance, don’t put it off if the time is right. You may really struggle to get that refi once you’ve pulled out of the workforce. Getting it taken care of before retirement — especially in this low interest rate environment — will save you a lot of headache (not to mention money).
