If you have paid your mortgage for a while, it has probably crossed your mind you'd like to pay off your mortgage and own your home free and clear. It would be nice to do at the time you retire - after all, it is a monthly payment less.
, we will go on if to get rid of this mortgage payment actually makes sense for you. If so, you have a couple of good options to time your last mortgage payment with your retirement.
pay Off your mortgage: the pros and cons
it may seem logical that you would try your mortgage until you retire, but may not be appropriate for you depending on your financial situation and goals. The next two sections will take you through the pros and cons of your mortgage before you retire.
reasons to pay off before retirement
there are several reasons it may be wise for you to make your final mortgage payment before retiring:
- you have a monthly payment to make. This means that you can spend that money on other investments, your grandchildren, travel, or finally get this project of passion.
- it could considerably increase your financial security. If you no longer have your monthly payment, you only need to pay your insurance and property taxes. This means that if a large medical bill arrives unexpectedly, you will be in a much better position to deal with.
- it might make more sense to use the low savings interest rates your mortgage rather than a mortgage refinancing rate.
- you can beat cycle. The property values are in an uptrend at the moment. History tells us that what goes up must come down. Pay off your mortgage faster can protect you against ever due on your home than it is worth.
why you can keep your mortgage
there are certainly pros to retire without a mortgage payment, but depending on your situation, it could make a lot of sense to keep and continue paying when you're out of work: it would be better to put your money towards other things at the moment rather than an important part of your monthly income toward your mortgage payments in the hope to pay
- it off more quickly. The mortgage is traditionally one of the interest debt payments less compared to other items such as credit cards. It may be wise to pay these down first.
- because mortgage rates are extremely low at the moment, if you had other areas of investment you want to put your money in, you can refinance into a lower payment and put the savings in shares or bonds, for example. You have a little more flexibility.
- you get a nice little tax deduction by having the possibility to deduct your mortgage interest payments.
strategies to pay Off your mortgage
If you started to look at the horizon to retirement and want to deposit your monthly mortgage payment, we have a couple of great options for you to take a look at
YOURgage
, you are probably used to seeing mortgage terms that are 15 or 30 years. If lenders are feeling adventurous, you might see a term of 10 or 20 years. Here at Quicken Loans, we have what is called the YOURgage. This loan option allows you to take out a loan at a conventional fixed rate and select a term anywhere between 8 and 30 years.
Let's say you want to retire in 12 years. Assume also that you have mortgage options different two, one who is 15 and ends in 12 years. Everything else on the loan remains the same. Your monthly payment will be a little more with the 12-year due to short term option, but you will pay less interest over the life of the loan. If you want to try some of your own scenarios to see what it would look like, you can consult our amortization calculator.
reverse Mortgage
Maybe you're looking to pay off your mortgage and give your retirement savings a little help in the process. There is a way to repay your mortgage to eliminate your monthly payments of the mortgage company pay piece.*
If you're 62 or more, our friends to a reverse mortgage, a company of Quicken Loans, can you help take the equity in your home to pay off your current mortgage. you get all of the money is to use surplus however desired. Many people use the extra money to pay off debts, postpone using their other retirement assets, build an emergency fund or other financial objectives.
, you have three options when you take out a reverse mortgage:
- with a variable-rate loan, you can choose to take a lump sum, monthly, a credit line or any combination of the three. If you do not the line of credit, the amount of unused money increases in value over time, and you can also put money that you take on the back, so she can continue to increase.
- with a rate fixed loan, you get your money in a single sum when the loan closes.
- you can also buy a new house with a reverse mortgage and not make a mortgage payment monthly for as long as you live in the maison.* it could be ideal for lonely them who are looking to downsize or to be closer to family and friends, but not wanting a new mortgage payment.
clearly, there is no such thing as money, and when the last person on the mortgage is more alive at home, the loan is due. At this point, your heirs have three options:
- if they want to keep the House, they can choose to refinance the 95% of the value of the House or the balance of the loan (if it is less) in a conventional mortgage.
- , they can sell the House. A reverse being a loan nonrecourse mortgage, your heirs must only pay what they can get a sale. If there is no money remaining after the loan is repaid, your heirs get to keep.
- If your heirs want nothing to do with the House at all, the House simply goes back to the lender or investor in the mortgage.
If you have decided to get rid of your mortgage payments to retirement is good for you, the YOURgage and the reverse mortgage are two great options. In order to start the YOURgage, check out SM mortgage ready Rocket of Quicken Loans or call the (888) 728-4702. For more information on reverse mortgages, visit a reverse mortgage.
* the owner is always responsible for the payment of taxes, insurance and maintenance of real property.