Should you refinance after 50?

Refinancing a mortgage after 50 might not seem like the most logical course of action. After all, it’s a time in life when you’re at least thinking hard about retirement, if you’re not already there. The last thing you want to do, reason would suggest, is to add more years to the end of your home loan.

With interest rates hitting record lows, many older homeowners are wrestling with the same question: Is it worth it to refinance at my age? The answer depends on a number of factors, including how long you plan to stay in the home, the interest rate and time remaining on your current mortgage, and the terms of your new loan.

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Factor in your retirement plans

If you’re over 50 and contemplating a mortgage refi, first give careful thought to your retirement plans. Do you expect to relocate soon? Downsizing to a smaller and more manageable home can make perfect sense. Even if you don’t plan to move, are you healthy enough to remain in your current home indefinitely? Weigh your medical conditions and family history.

Unless you can stay put long enough to recoup the closing costs and start pocketing the savings offered by the lower rate, refinancing might not make sense. Use a mortgage refinance calculator to run the numbers and pay particular attention to the breakeven point when your savings surpass the closing costs. Have good-faith estimates from lenders handy so you can input accurate closing costs.

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Look at what’s left on your mortgage

If you’re over 50, odds are you’re at least a few years into your three-decade loan period. Depending how much is left on your mortgage, you’ll have to decide whether you want to restart the clock for another 30 years and extend the length of the mortgage into your 80s.

However, if you’re halfway through the 30 years and paying above-market interest, you might opt instead to refinance to a 15-year mortgage. Just make sure the new rate will allow you to recoup closing costs quickly, say in a year or so. Rates on 15-year mortgages are lower than those on 30-year loans.

In some cases, a better option for older homeowners who are well into a 30-year loan might be to start making extra mortgage payments rather than to refinance. You can save a ton in interest without the added closing costs by paying off a mortgage early. You’ll also find yourself mortgage-free almost two years earlier by making extra monthly payments.

A better option for older homeowners who are well into a 30-year loan might be to start making extra mortgage payments rather than refinancing. You can save a bundle in interest this way.

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Working in the senior industry for the past 20+ years has been such rewarding experience. I've witnessed every walk of life from the rich and famous to the not so fortunate...Folks who were prepared for their future and those who are not. My hope is that your lives will be enriched from the supportive content here and that it will help enable you to "Embrace Life over 50!"