Older vets may benefit from a home refinance

Alaska Older Veterans Report

As an older veteran, the last thing on your mind might be a home refinancing plan. You may have paid off your house and are basking in the lifelong dream of finally having no mortgage payment. Spending money on house payments are for the younger folks, right. Well, I want you to consider some salient points for pulling some cash out of the old homestead.

First, interest rates are at an all-time low. With a little shopping, you should be able to find a VA lender offering rates on a 30-year fixed as low as 3.5 percent. If you are receiving any VA disability income, the lender may not charge you any processing fees. With your equity, you could refinance with no out of pocket upfront cost. As with all financial manners, do your due diligence. I am not a professional financial advisor, but I do play one in this article and at several local coffee shop locations.

You may have several personal reasons for considering a refi at this late stage of life. Personally, I like spending the kids’ inheritance and just leaving them with your everlasting love and affection for the many years of joy they brought.

Too hard on the kiddie, you say? Well, on a worst case basis, let’s explore some possible outcomes to having lots of equity in your abode.

For a lot of seniors, pensions and Social Security haven’t kept up with inflation. Add to the mix the shrinking value of the dollar, you find yourself strapped for cash at the end of the month. Owing no money on your home is every family’s dream but not using that equity to pay down high-interest credit cards (many with interest rates as high as 30 percent with Draconian late penalties) and deferring your home’s upkeep isn’t wise.

Next good reason is that you can’t take it with you. I have been looking for a way to pad my ascent (or descent; the jury is still out) into the afterlife but still haven’t found one. Personally, if I could pick my way to check out, it would revolve around falling off a bar stool in Bangkok and hitting my head after laughing at a joke. Sorry, but I can’t seem to rise above my Army helicopter pilot days.

However, reality has shown me that one minute you are heading to Wallyworld to check out the clearance section and, bang!, you slip on the steps, and break a hip. Depending on your overall health and living situation, you could have just entered the world of long-term care.

Even worse, you have a stroke, survive but are unable to live at home. Medicare doesn’t cover long term care stays, but Medicaid does. Yes, you heard it right. The premium you are still paying out of your retirement from Social Security doesn’t cover you in your time of need. But if you just got off the boat from a third world country, just released from jail, or a teenager who has just realized that s/he should have paid better attention in sex ed class instead of giggling, you are covered.

With long term care facility monthly rates ranging from $4,000 to $28,000 depending on the level of care, how long can you pay this amount out of pocket? For most of us, it ain’t long. At that point, you are on Medicaid until you die. Good deal, you say, but your heirs will find out Uncle Sam will reach into the casket and your pockets to get reimbursed for their generosity. Remember the phrase “Ain’t no such thing as a free lunch”?

The government will be paid back first for the funds spent by you using Medicaid. For most families, this means you will get very little out of your parent’s estate.

I don’t know about you, but my family comes before Uncle Sam.

The point that’s lost in the national discussion is Social Security is not funded by the U.S. government. No, it is funded by employees and employers. If you receive a W-2, then your employer has contributed dollar for dollar to your account. If you are self-employed, then you have paid the full ride.

By now, you may be seeing some advantages for pulling equity out of your estate and giving it to your grandchildren. This strategy is good estate planning and not anything untoward. Unless you are part of the .00001 percent of the population that believes government can spend your money better than you, then die broke and enjoy yourself. Life is not a dress rehearsal.

I bet now falling off a bar stool in Bangkok sounds pretty good, eh?

For now, Major Mike is pulling pitch and getting above the small arms fire en route to Far North Fubar Farm.

Mike Dryden is a retired Army Major and current board member of Older Persons Action Group, Inc.

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