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Value Creation Blog

Pay Off Your Mortgage Before You Retire: Vermont Retirement Planning

Posted by Josh Patrick

mortgage_paymentsIf you own your home it’s probable that you have a mortgage.  How often do you think about paying off the mortgage and being debt free?  If you’re not doing this you might find that reaching retirement will be hard.

Not having a mortgage reduces your overhead.

I could also say that not having a mortgage will mean you need less money to live.  You’ll lower your personal break-even point.  This is always a good thing.

If your mortgage is $1,500 per month not having payments means you’ve just put $18,000 per year in your pocket.  Paying off your mortgage isn’t hard, you just have to consistently save and have the discipline and not use the equity value in your house for toys.

Think about doubling up payments.

The easiest way to pay off your mortgage is to make two payments a month instead of one.  While you’re at it, think about adding another $100 per month to that payment.  If you do both of these things you’ll take years off the amount of time it’ll take you to pay it off.

You have more options.

When your mortgage is paid off you have options.  You might decide to stay where you live.  You might decide to sell your house and move to a less expensive part of the country.

If you owe money on your house, making a move will probably still leave you with a mortgage.  If you owe nothing, you can move and decide to work or not in retirement much more easily.

You might even be able to tap your home’s value.

Too many people haven’t saved enough for retirement.  I’m hoping you’re not one of them.

If you haven’t saved enough and you have no mortgage, you have options.  You can sell your house and move to one that’s less expensive.  You might even be able to take some money and add it to your retirement savings.  It’ll probably not be enough, but it’ll surely help. 

I bet you’ve thought every once in a while about moving to a smaller house.  If you have you can tap your home equity in retirement.  This can only happen if you have equity……so plan to pay off your mortgage.

You’ll have more options.

For me a good financial plan is about having options.  If you owe money on your house it’s simple, you have less options. 

When your mortgage is gone.  You’ve made your financial life safer.  That’s something I think is worthwhile.  Be smart and spend some time thinking about the future.  I bet if you do, not having a mortgage will be an important part of that plan.

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Topics: retirement, financial planning, mortgage payments

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