Should You Refinance Before Retirement? 7 Pros and Cons


Thanks to historically low interest rates, refinancing a mortgage in recent years has been a no-brainer for many homeowners.

But when retirement is looming on the horizon, the decision to refinance can be more complicated—especially with interest rates now on the rise.

For some near-retirees, trading in a high-interest mortgage for one with a lower rate can result in substantial monthly savings, which can then be plowed into retirement accounts. But for many in their fifties and early sixties, it may be smarter to avoid refinancing before entering their golden years.

If homeowners are leaning toward refinancing, the time to act is probably now. As the housing market has stabilized, interest rates have crept up, “which makes refinancing less advantageous for everyone,” says David Blaylock, a Certified Financial Planner™ with LearnVest Planning Services.

The average rate for a 30-year fixed rate mortgage in January 2013 was 3.6%—by December, it was 4.5%. And the average 15-year fixed rate mortgage jumped from 2.9% to 3.6% over the same period, according to, which publishes mortgage information.

The forecast for 2014? According to Keith Gumbinger, vice president of, rates are expected to continue rising, although the increase is likely to be gradual.

“The incoming Federal Reserve chair, Janet Yellen, is likely to continue the low interest rates and supportive policies of the Federal Reserve for the foreseeable future,” Gumbinger adds. “My crystal ball is no better than anyone else’s, but I expect any changes to start very gradually and arguably later in the year—and then only if the economy is showing that it is strong enough to stand on its own two feet.”

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  • Ashley Nelson

    I’d like to say that refinancing while retirement is a complete NO! The disadvantages are way more than the advantages. If you’ve accumulated enough equity in your home, why would you refinance for extra cash instead of taking out a reverse mortgage? If you haven’t reached the age, wait on! Taking out a reverse mortgage is a better way of getting access to cash and your heirs can also stay cool about it. You don’t retire with debt and there’s no dangling sword that forces you to make payments towards the loan. Instead, you are paid monthly by the lender.