When you are considering the combination of estate planning and refinancing a home, you must remember that refinancing your home could have an impact on your future estate planning. We do not want to be morbid, but you must consider what would happen if you refinance your home and suddenly pass away. The situations below help to spell out this relationship so you can make a wise decision for your family.
Taking Out Cash
When you refinance your home to take out cash or a line of credit, you must remember that you are incurring further debt. You may think that you will live long enough to pay off this debt or manage it easily. However, you could pass away and leave your family with the responsibility to pay off this extra debt.
When you lower your payments, you are making your home easier to pay off. You may have decided long ago to bequeath your home to a certain member of your family. If you are planning on giving the home to someone who can afford to pay it off, you should inform them that the house is in a different financial situation.
When you have a home mortgage, that lien is owned by the mortgage company. The mortgage company has the right to do what they must to recover their investment. If you lengthen the life of a loan on your home, you must make sure you are financially preparing your family to pay for that home. The family can keep the house indefinitely, but they must be able to afford it. In the event that the family cannot pay for the house, the mortgage company will foreclose. If you do not plan in advance, your family could be without a place to live.
Estate planning and refinancing a home go hand in hand when you think of them together. You want to lower your payments to make it easy for your family to pay off the house, but you do not want to extend the loan too much that the family cannot afford it. The debt that you incur when you are using a mortgage or line of credit is something your family must deal with in the future. You should ask a lawyer for advice on estate planning and refinancing a home to make sure you make the right decisions. These are important and complex decisions. In order to avoid problems and mistakes, it is advisable that you contact Felinton Elder Law & Estate Planning centers for a consultation on estate planning and refinancing a home. Let them help you protect the future of your assets and protect your loved ones.