Life and Money With Helaine by Helaine Olen

Planning for the Future Should Be Part of Refinancing Decision

Hi, Helaine: The hubs and I are preparing to refinance our home. In 2005, he was in a near-fatal crash that decimated our finances down to foreclosure and bankruptcy. By 2014, I had our credit score back to the low 700s, and we qualified for an FHA loan as first-time homebuyers since we hadn't owned a home in over seven years.

We bought a home for $220,000 that's now worth $300,000. We now need to pull equity for major plumbing repairs and would like to also get out from under the $250-a-month private mortgage insurance.

My husband is 65 and retired. I'm 60, and good for work for another dozen years. My income is good and stable. We recently bought my husband a secondhand car, but have no other consumer debt. Our credit score is in the mid-700s.

My hope is to get another 30-year loan so we can keep the monthly payment in the same area after the equity pull. We have cash for closing. I plan to get at least three quotes. Any words of wisdom? -- Plumbing for Dollars

Dear Plumbing for Dollars: I'm so sorry this happened to you, and congratulations on your excellent financial recovery. I think this plan is mostly a good one, but I want you to think about a few things.

First, what will you do if your job suddenly goes away? I know I harp on this, but the majority of people over the age of 50 do not leave well-paying jobs of their own volition. They are often shoved, nudged or outright fired. What are your plans if this happens to you? Will you be able to keep up financially? Would you need to relocate -- either to a smaller home, a condo or another region of the country altogether? If that's the case, you might want to contemplate downsizing now, before you spend tens of thousands of dollars on major plumbing work and other upgrades.

Conversely, if you are all but certain you plan to do what the experts call "age in place," you might want to use some of that money to make the changes -- say, a walk-in shower, if you don't have one, and nonslip flooring -- that you will eventually need.

Finally, if you are planning to tap your home equity to get by in retirement, I would not extend the life of the loan. The less interest you pay, the better.

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