You are here: Home Finances New Uses of ... Mortgage ... Summary
Information about all aspects of finances affected by a serious health condition. Includes income sources such as work, investments, and private and government disability programs, and expenses such as medical bills, and how to deal with financial problems.
Information about all aspects of health care from choosing a doctor and treatment, staying safe in a hospital, to end of life care. Includes how to obtain, choose and maximize health insurance policies.
Answers to your practical questions such as how to travel safely despite your health condition, how to avoid getting infected by a pet, and what to say or not say to an insurance company.


Mortgage refinancing is when you take out a new mortgage to replace your old one.

Refinancing can provide cash, lower your monthly payments and/or lower your overall costs.

When thinking about whether to refinance a mortgage:

  • Compare what you're paying out-of-pocket to what you would pay if the rates are lower. 
  • Consider the closing costs and fees - though they may not be as important to you right now as compared to monthly payments - particularly if payment of the costs comes from the refinance proceeds. If you refinance with your current lender, some costs may be waived or reduced, such as for title insurance and appraisals. (Keep in mind that fees are negotiable.)
  • Anticipate at least 45 days for a refinancing. If interest rates are low, there may be a lot of mortgage activity and the process could take even longer. Banks tend to process new home purchases before refinances.

If you decide to refinance, it is wise to shop around to find the best interest rate combined with the type of mortgage that is best for you. At least consider:

  • interest rate
  • Whether the rate is variable (adjustable) 
  • The length of the loan term.

For information about mortgage refinancing, see:

NOTE: It would be helpful if the lender offers mortgage insurance with few or no health questions or can point you to a source for purchasing it on your own. Mortgage insurance pays off the loan in case you die.

To Learn More

More Information

New Uses Of Assets

Related Articles

How To Deal With A Financial Crunch

Reasons To Refinance A Mortgage

Get cash. If your house is worth more than you owe, you can access cash by replacing your current mortgage with a larger one. For example, if your home is currently valued at $150,000 and your loan balance is $80,000, you might be able to get a new mortgage for $112,500 (75% of $150,000). That would allow you to pay off the $80,000 balance and have $32,500 to spend however you wish.

Lower your monthly payments: You can lower your monthly payments either by refinancing to:

  • A new mortgage with a lower rate of interest.
  • A new mortgage for a longer period of time.
  • An interest-only mortgage which reduces your monthly payments because you only pay interest, and not any principal - typically for the first ten to fifteen years. Monthly payments are reduced even though these mortgages typically carry a rate that is one-eighth to three-eighths of a percentage point higher than the rate on a traditional 30 year fixed-rate mortgage. You can get an interest-only mortgage with a fixed rate (the rate of interest stays the same throughout the term of the loan) or a variable rate (the rate fluctuates according to a standard, such as a consumer price index.) Payments jump substantially at the end of the interest-only period. You basically pay off the balance of the mortgage over the rest of the loan term instead of over the whole loan term. Also, during the interest only phase, your only equity build up in your home is from rising property values.

When your finances improve, you can minimize the shock of the increase by paying money against the principal during the interest-only period. As you pay down the principal, the interest-only payment is reduced to reflect the lower loan balance.

To calculate the true cost (or savings) or refinancing, try's online calculator at offsite link, or check with your financial planner.

Lower your overall costs: If interest rates are lower than when you took out your mortgage, you can replace your mortgage with a new one at a lower rate of interest. Consider costs of taking the new mortgage before leaping into a new mortgage for this reason.

You can find current interest rates by calling your local banks or on the internet at such sites as offsite link.

To find out whether it's worth refinancing because of a lower interest rate, use the refinancing calculator at offsite link.

How Do I Qualify For Mortgage Refinancing?

Qualifying to refinance your mortgage is the same as qualifying to buy a home. Your credit and income will both be evaluated in terms of your ability to repay. The lender will also look at the current market value of the home.

The lender cannot use your health as a factor in deciding whether or not to approve you. This includes the source of your income. For example, if you receive an income from Social Security because you are “disabled,” the fact of your “disability” doesn’t matter. Only the amount of the income counts.

Pitfalls To Watch For When Refinancing A Mortgage

  • If you cannot make the required monthly payments you could lose your home. Make sure you can afford your new monthly payment.
  • A mortgage for a greater amount will reduce the amount of equity you have in your home (equity is the difference between the amount of the loan on the house and fair market value.) This will result in less cash if you or your heirs sell the house unless the value of the house appreciates. On the other hand, if the house depreciates, you could end up owing more than the house is worth. It is possible that you will be stuck for the difference if the home has to be sold.
  • Check to see that a person who holds him or herself out as a mortgage broker is licensed in your state. You can check at: offsite link

Taxes And Mortgages

If you itemize deductions, you can deduct the amount of interest you pay with respect to mortgages on your home.

  • If you take out a second mortgage, the amount of your deduction will increase by the amount of the extra interest you pay. Points that you pay for a second mortgage are also deductible, but must be amortized over the length of the loan.
  • If you refinance to take advantage of lower interest rates, the amount of your deduction will probably decrease - unless you also extend the period of time remaining until your loan is paid off.

To Learn More

More Information


Should I Refinance?

If you are trying to get cash out of your home, it is advisable to consider your alternatives and compare them to each other. Keep in mind that if you can’t meet the mortgage payments, you may lose your home.

Refinancing may be the easiest way to stay in your home and access extra funds at the same time. Refinancing can also make sense if you are simply trying to lower your mortgage payments and not increase the amount of the mortgage.

Types Of Mortgages

These days, there are a variety of mortgages, different variables that can be mixed and matched. Variations include how interest is calculated, length of time the mortgage exists, and payments.

Interest Rates

There are both fixed and variable (adjustable) interest rate mortgages.

  • Fixed rate mortgages set the interest rate for the entire mortgage term. Fix rate mortgages generally have higher rates initially but the rate is locked in over the life of the loan. You are not at risk from rising interest rates. If interest rates drop substantially, it is possible to refinance (with additional fees.)
  • Adjustable-rate mortgages, just as the names implies, adjust interest rates periodically to match current interest rates. Generally the adjustment happens once a year, and has a maximum amount of increase permitted each time. There is also generally a cap on the total rate payable. The borrower is at risk of higher interest rates. On the other hand, you receive a lower interest rate if interest rates drop.

A variation of this type of interest is a one-year adjustable-rate mortgage. The interest rate is fixed for one year. Then it adjusts annually.


With most mortgages, part of each payment pays interest and part reduces the amount of principal (the amount of your debt.)

Some mortgages are "interest-only" for a period of time.

  • You only pay interest rather than interest and principal for first part of the loan, typically for the first ten to fifteen years. Then in the second part of the loan both interest and principal begin to be repaid. With this type of loan, you basically pay off the balance of the mortgage over the last part of the loan term instead of over the whole term. You are not building equity in your home during the interest-only period, except for the amount of the rise in property values, if any.
  • When your finances improve you can minimize the shock of the higher payments later by paying money against the principal during the interest-only period. As you pay down the principal, the interest-only payment is reduced to reflect the lower loan balance.
  • These mortgages can come with a fixed interest rate or a variable (adjustable) interest rate. (See above.)

There are also mortgages in which the amount you pay does not pay off the entire amount of the loan over the loan term. In those cases, you owe a "balloon" payment at the end - a payment of a large amount of money. There is a risk if you cannot come up with that amount of money on a timely basis.


15-year and 30-year mortgages are the two most common lengths for mortgages. The longer the mortgage, the more interest you pay. When you compare the actual numbers, you will see that the difference can be very substantial. Choice of mortgage length may depend on the very pragmatic question: how much do monthly payments work out to be? A mortgage with a longer life with have lower payments per month.

What To Do If You Decide To Refinance

Shop around: Check at least three lenders, including the one that holds your existing mortgage. To get started, consider speaking with at least one mortgage broker. Their job is to have a fix on the various mortgages available, and an understanding of the ones for which you qualify. As a general matter, they get paid by the lender. Since they don't work for all lenders, it's wise to do some research on your own.

Some well known places to start:

We haven't worked with any of these companies so proceed with caution.

To find a licensed mortgage broker, check with your financial planner, accountant or lawyer.

Ask if you can obtain mortgage life insurance to cover the new mortgage. (The amount of the life insurance decreases in step with decreases in the amount you owe on your mortgage.) If you can obtain this insurance, it may be worth refinancing even if the costs are higher than your current mortgage because the insurance will pay off your mortgage if you die. In essence, you will increase the value of your estate by the amount the insurance policy pays.

When deciding about the type and length of mortgage, consider how long you plan to live in the home and your ability to make the payments if the interest rate increases to the maximum variable rate. Generally, the longer the period you plan to live in the home, the more likely you are to be better off with the fixed-rate mortgage.

Veterans And Mortgages

If you are a veteran, you may be eligible for a loan backed by the Veterans Administration. For frequently asked questions about the program, including how to locate a lender, see offsite link.