Refinancing seems like a great idea for home owners looking to shave hundreds of dollars off of their monthly bills and put it into savings.
However, a growing problem exists within the mortgage market involving the mortgage refinancing process and life insurance policies.
Many people saving for retirement fail to recognize that refinancing may result in an extension of a mortgage. For those who only take out life insurance that lasts up until retirement, this can conflict with mortgage bills that continue to come in.
“Homeowners often buy term life insurance designed to pay off their mortgages in the case of an untimely death,” says Gary Lardy, CEO of IntelliQuote Insurance Services.
“As most people envision that they’ll have their mortgages paid off by age 65, many acquire a policy that covers them up to that age. A problem can occur, however, if, as a result of refinancing, mortgage payments get extended into retirement.”
In order to avoid this problem, taking out life insurance policies that extend a few years after a planned retirement age may be worth the hassle and few extra bucks.
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