You are probably closer to retirement and plot on paying off your mortgage in the next five years. But you are not sure whether it still makes sense given the current market conditions.
As 40% of your retirement savings have already suffered, you can only hope that the stock market will recoil so you will be able to recover what you have lost.
Do you really need to pay off your mortgage in advance before you retire?
There are two reasons why you should pay off your debt and accelerate your mortgage payments especially in 2009.
You should, but, take these two precautions before you go and get your mortgage paid off.
Paying your credit card debt would be a pretty much sensible priority this year, especially when they are already considerably high. It is vital that you do this before you really pay for mortgage because credit card interest rates can go as high as 30%. I will be talking about one exception later on.
Another vital consideration would be this: make sure that your 401(k) or retirement savings account contributions are updated. Although the stock market has not been doing so well during the last eight months, keep contributing to your retirement savings account so that you can still qualify for your employer matching contribution. This is like free money.
The go to pay off your mortgage when you have done all these will be the most appropriate step to take before you retire. And it is even better if you take action this year.
The best reason why you should own your home in retirement is that you would use your retirement funds only for property tax and maintenance cost. You don’t need to use your retirement savings to pay off your huge monthly mortgage bill.
If you pay off your mortgage in retirement you have the option of getting access to your money through a reverse mortgage.
With a reverse mortgage, you will be able to make use of your home equity and turn your home as a source of income when you retire. But, you may only delight in this benefit if you have your mortgage account nearly paid off fully.
You would reckon that you will be paying off your mortgage out of your hard-earned money but this should not be the case.
There is a new technique called mortgage acceleration that will help you pay off your mortgage quicker without changing your lifestyle. This technique can help you slash at least 13 years off your mortgage and save thousands of dollars of interest.