If you are a retired senior or planning retirement, you should evaluate your
home mortgage and any other debt you have. You may find that refinancing a home
mortgage better fits your current and future retirement financial planning
If you refinance home mortgage loans you can:
Home mortgage refinancing can enable a variety of retirement financial planning
goals. You can refinance home mortgage loans to:
Subprime lenders specialize in servicing individuals with poor or non-existent
credit histories. Often these types of consumers will not be able to refinance
home mortgage loans through a lender that only services prime, or ‘good’ type
Some subprime lenders are independent, but increasingly they are affiliates of
mainstream lenders operating under different names.
Sub-prime lenders seldom if ever identify themselves as such. The only clear
giveaway is their prices, which are uniformly higher than those quoted by
If you work with a sub-prime lender you should carefully review the terms of any
mortgage refinance loans, sometimes sub-prime lenders have very aggressive terms
and if you don’t meet your payment obligations you could face much higher rates
In general, you should only use subprime lenders if you are unable to get a loan
from a prime lender.
Points are an upfront cash payment required by the lender as part of the charge
for the loan. Points are expressed as a percentage of the loan amount. For
example, "three points" means a charge equal to 3 percent of the loan balance.
Generally, when you pay points, you are paying some money upfront in exchange
for lower monthly payments and/or a lower interest rate.
Most loan companies will offer a range of point and interest rate combinations.
For example, if you are only paying one point, then you are likely getting a
higher interest rate than if you were paying three points.
In most cases, it is a good idea to pay points if you plan to be in your home
for a very long time. If you are only going to be in the home for a short
period, then you should not put money toward points. Conversely, if you believe
that you will remain in your house for a long time, then it may be worthwhile to
pay additional points to obtain a lower interest rate. Point can be paid using
cash generated from the mortgage refinance.
In some situations, the loan company will finance the points for you – offering
you a negative point loan. Positive and negative points are sometimes termed
"discounts" and "premiums", respectively.
The decision to pay points is unique to each consumer, and involves the tradeoff
of upfront cost verses lower monthly payments.
NOTE: If your objective is to raise cash or increase your income and you have
significant home equity built up, you may want to evaluate using a Reverse
Mortgage instead of refinancing your home.
Home mortgage refinancing is not without risk. Be careful of the following
In general, the loan process will take you through the following steps: