Paying off a Mortgage before Retirement

As we get older and closer to a retirement age, it is important to have a comprehensive retirement plan in place. This includes a steady flow of income of which you will survive on after retiring. To achieve this, it often requires you to reduce outstanding dues, debts, loans, or mortgages as much as possible.

Mortgage payments that are high will eat into your retirement plan, and this may lead to a financial future that is not as secure as you intended. This is why most people prefer to pay off their mortgages before retiring, or reduce the outstanding balance to manageable levels.

There are various ways in which one can successfully pay off their mortgage before retirement is apparent. You will still need to pay associated fees like home owners associations and property insurance taxes. However, eliminating the principle and interest from you list of bills before retiring will significantly improve your income. Paying off a mortgage depends on a lot of factors including:

• Current budget and income
• How deep into payment you have reached
• Loan terms and balances

It is important to clearly map out your budget and income to see places you can adjust to provide increased payments towards the mortgage. This usually results in increasing monthly payments so that the duration is shortened.

Refinancing is a possible option for reducing the period of repayment. Refinancing for a shorter term may reduce your paying period by five or more years depending on the amount you are capable of comfortably paying. Refinancing does have additional closing costs and transaction fees.

Some people will be better off paying extra costs in their current payment scheme rather than refinancing and then incurring closing costs. One of the most effective ways of paying off mortgages before retirement is through extra payments. Add extra payments during the course of payments or better yet, pay lumps of money after receiving reliefs like tax-deductions or refunds. This will have a big difference in your overall interest. Your outstanding balance will also be significantly reduced. Adding extra payments will definitely give you the liberty of being mortgage free a few years before the original plan. It also goes a long way in reducing the total amount of interest you end up paying.

It is important to contextualize your mortgage payoff decision. This does not only set defined targets and commitments but also clearly exposes impractical solutions. Eliminate other side-debts that are not tax-deductible before you begin paying off a mortgage. You may want to see an experienced financial planner and lender to discuss your status and options.

Paying off mortgage interests and principle before retiring is very important. The steady income used in payments during working years is no longer available, and paying mortgage from your pension plans may be strenuous on your budget. It is also important to ensure you make all the necessary payments in time to avoid rising interests and penalty fees that may extend your owing period.

The Pros and Cons of Being a Homeowner

We’ve seen that most people regard a home as the most important investment of a lifetime. In contrast, there are others who feel that buying a property is not really an investment, but something that’s required for a stress free existence.

Whatever the case, home purchase does involve spending a substantial amount of money that could be used elsewhere for possible better purposes. But yes, there are certainly some intangible benefits associated with buying a home. And you cannot easily set a price for these. We’ve listed some advantages for you:

There most likely won’t be a reason for you to get kicked out of your home

Even if you’re comfortably settled in a rented house and are utterly blissful, who knows how long it’ll last. All said and done, you’re not the owner of the house. Your landlord has the liberty to unceremoniously give you a notice of 30 days and there your blissful world comes crashing down.

You have to frantically search for another suitable rental and a moving company. Maybe you’ll never get the same lovely neighborhood again, the same conveniences and goodbye to many other things!

If you have your own home which has been properly selected to include everything you ever wanted, you’re in an eternal blissful state. No one tells you to move out and you can live there as long as you wish.

You can customize your home

When you’re staying in a rental, there’s almost zero desire to improve it. Why bother? You’ll spend money and maybe your landlord will have objections. You might even lose your deposit if you try.

In a place you own, you can make little customizations to make life cozier. For example, you could make your home more energy efficient, which would save money and benefit planet earth too. You could do things like splitting a room into a couple of smaller ones, plan a garden and do other interesting things.

Though it’s hard to measure, some improvements really improve happiness levels. On the flip side, homeownership has its own disadvantages.

What if the new neighbors are a nuisance?

Your lovely neighbors moved away and now you’re stuck with noisy, troublesome ones. They hate your dogs. Worse, they’re considering getting a vicious pitbull. Annoying neighbors can make life truly difficult.

Resolving the issue by selling your house is an expensive affair- definitely more expensive than changing a rental, even if it involves breaking a lease.

What if there’s a rotten homeowners association at your condo?

We’ve heard horror stories related to egoistical HOA presidents who have their own highly priced pet projects. Also expensive assessments that you’re forced to accept. Suffer in silence – it’s a way of life, no choice.

Homeownership costs money

While some people regard mortgage payments as a type of forced savings, isn’t living on rent forced frugality? Almost all renters are free of hassles related to weekly trips to the Home Depot. They don’t have to worry about what type of kitchen tiles to get when some break. Simply calling the landlord resolves most issues.