Many people used to consider a mortgage burning party to be part of the American dream. But things have changed because of record low mortgage rates in recent years.
You might be tempted to plan the extension of the note as long as possible – and even well into your retirement years – when you try to earn a higher return investment. But before you decide to stick to minimum payments, consider the following advantages of not having mortgage payments at retirement:
Not having a mortgage gives you peace of mind. Once you eliminate your mortgage, you do not need to worry about the extra cash would be required to pay the monthly bill. You do not need to agonize about whether your investments are performing better than the interest you pay. Owning your home free and clear cut a huge amount of stress, which is what retirement is all about.
Have equity will increase your mobility and choice in retirement. If you fall far behind on your mortgage payments, you could be forced to move. Without a mortgage, you have total control over where you live. You can downsize or relocate as soon as you feel is best for you or choose to stay in your current home for the rest of your life. Where you live can play a big role in your retirement expenses, in order to have the choice to stay or go and gives you additional control over your finances.
Aggressively paying off your mortgage will help you build equity faster. Pay off your home quickly can allow you to avoid paying for private mortgage insurance earlier because you will build equity in your home faster. It could also mean to qualify for the best rates offered by the market being under the conforming loan limit. You may be able to take advantage of lower rates whenever lenders offer more competitive terms by refinancing your existing mortgage.
Try to pay off your mortgage when you retire is like a forced savings. Making the decision to have a debt-free retirement means you will save more to get there gradually. This not only helps you pay less interest, but it also motivates to reduce unnecessary spending over the years. For many people, the additional savings they are able to accumulate more than compensates for the interest they could get by investing in additional payments markets.
Taking less risk means less chance that things can go wrong. Even if you are a guru to invest your entire life, his mental and physical abilities of each declines with age. You may be able to do more in the stock market than paying your mortgage now, but this may not be true forever. Unfortunately, many people do not realize the drop until the damage is irreversible. Retirement of your mortgage when you retire is often a prudent choice because you are limiting the chances of a disaster.
It’s up to you if you want to keep your debt or eliminate it. Make sure you understand what you are missing out on if you decide to extend the risk of holding a mortgage.