I am 71 years old semi retired. I have considerable debt ( 40,000.) and was wondering if I should refinance my home or if I should take money out of my Annuities to pay off debt?
Terry Says: Well, I think I need to know more about the larger picture here to give good advice, but let me make a few points and then send you to someone who can help you individually. First, if you’re “semi-retired” you will find it difficult to refinance your home. Big question: Are you sure you want to stay in your home with all its expenses? If you do, a reverse mortgage might the solution — IF you have a low mortgage balance, and if you know you can still afford to maintain the home and pay the property taxes and insurance? You could take a small lump sum to pay down your debt through a RM, but you would also be paying fees to set it up, and a high rate of interest on the “loan” that comes out of your equity. That’s no problem as long as you stay in the home, but if you move out or die, your loan must be repaid — leaving less for you or your heirs.
The other question I wanted to ask is whether you can change your “semi” retired status and figure out a way to earn more money — even if it is not through your traditional work. If you’re around home, maybe you could serve as a sort of “grandma” or “grandpa” figure after school for kids whose parents work. That could earn you enough extra to make a big dent in that debt. Or maybe you could rent a room in your home to a college student or another senior. Earning more is a far better solution.
But for specifics, call the National Foundation for Credit Counseling at 800-388-2227. That will connect you to the nearest local office. You can trust them — and they are trained to come up with ideas for your situation.