ETF Trends
ETF Trends

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By George Guerin

Recently mortgage rates dropped to their lowest rates in history. At the moment, rates are sitting at an amazing 3.25% to 3.75% for a 30-year fixed mortgage.

For anyone still holding on to high-interest debt—including retirees—this is great news. Surprised to hear the word “retiree” in that statement? You’re not alone. Common wisdom has long held that retirement is not the time to rework debt, but today’s low-interest rates are anything but common, and in some cases they can be the welcome bearer of financial opportunity. That was certainly the case for Martha.

When Martha was widowed 10 years ago, she bought a townhome in a senior-citizen community that was closer to her son and grandkids. Just 58 years old at the time, she was still working and could easily afford her mortgage, car payment, and other expenses on her salary. When we met last week, however, we had some new challenges to tackle.

Related: Increasing Retirement Income Through the Power of Tax Deferral

Now 68, Martha was unwittingly thrown into full retirement when she was laid off from her job last year. Without a paycheck, her monthly income has been reduced significantly to $2,850. She’s receiving $1,750 from Social Security, $100 from her pension, and $1,000 after-tax net from an IRA withdrawal, but with a mortgage payment of $750, plus Homeowners Association (HOA) fees of $250 a month and a $175 car payment, her expendable income is very limited, to say the least.

When I first mentioned the idea of refinancing to Martha, she was surprised. “I didn’t think I could qualify now that I’m retired. Is it really possible?” I assured her that as long we could verify her income, refinancing was very possible—even if that income is coming from retirement savings rather than a salary. Working together, we came up with a great plan that puts today’s interest rates to work for Martha’s cash-strapped situation. Here’s how we did it.

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