Some Do's And Don'ts For Refinancing A Mortgage During Estate Planning

Estate planning is important for any American to complete. But it can be a big job, and it may require other tasks to be done at the same time. One of these other tasks might just be to refinance your home. Should you take this step? Here are a few do's and don'ts to help you make the best choice for yourself and your heirs. 

Do Refinance to Save Estate Money

Any time you can lower interest rates, pay off your mortgage faster, and gain equity in real estate, your estate and heirs benefit. There will be more left over if something happens to you, and heirs may not even have to get a loan to keep the property. So if rates have gone down and you can save plenty of interest, take the step. 

Don't Refinance for a Trust

Trusts are excellent tools to avoid probate and pass on large assets as quickly as possible. If you plan to use a trust to protect your home, though, you generally aren't required to refinance. Check with your lender, of course. However, in most cases, the lender will want you on the mortgage rather than the trust. 

Do Refinance to Remove a Party

Take a look at who is on your loan and the property's title. If you share ownership or legal obligation for the mortgage, these could create problems if you pass away. For instance, if your estate can't or doesn't pay the mortgage loan, the lender will likely go after a co-signer. So the best move for both of you is to remove that co-signer now. 

Don't Refinance After You're Done

The best time to make changes to your estate's assets and debts is before you've finalized your will and planning documents. Consider how refinancing might change things after the fact. If you do a cash-out refinance and take out money from the home, its equity is lower for heirs. If you leave it to one heir, the value they get from it could then be unequal compared to other heirs' assets. You may not achieve the desired effect. 

Do Refinance to Fix the House

Owning a home is one of the biggest assets for most Americans. If yours has fallen behind in maintenance, needs to be updated, or needs some big repair, a cash-out refinance is a great option. Putting money into the home's future protects it for heirs and prevents problems they will have to deal with. 

Where to Start

Could refinancing help you protect your estate and make the best plan for your family and loved ones? If so, start by learning more about the refinancing options available to you. Meet with a lending agent today. 

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