Do You Need To Fully Settle Your Mortgage Before Retiring?

Do You Need To Fully Settle Your Mortgage Before Retiring?
By Judith Hayes
Last updated: November 26, 2015
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Do You Need To Fully Settle Your Mortgage Before Retiring?

During the early years, people usually retire with no debt. Meaning most of them have fully settled their mortgage. Today, it is hard to make this a possibility. Most do not even have pension or health insurance sponsored by a company. They mainly rely on 401(k) retirement fund while others have self-sponsored health insurance. Majority of retirees even avail new mortgages instead of downsizing.

Is the "big mortgage" a good choice?

Majority of retirees do not have control on the size of their mortgage. They just don't have enough money to settle their debt. Although it is best to pay all of it, there are still advantages in retaining some of your debt particularly if the interest rate is low. There are also tax rebates available if you have other sources of income.

How should you handle paying your mortgage?

Although there are real tax advantages when you have an existing mortgage, there are risks involved since you do not have control on the future. As you near retirement, financial experts suggest that you should exert effort to settle your mortgage without compromising other factors. These include family health care, retirement and emergency fund. You should evaluate all factors in order to make the best decision.

How do you settle your mortgage?

Paying your entire mortgage prior to retiring is still the best thing to do. Just make sure you do not neglect your other needs. If you do not have sufficient funds to pay everything in advance, you can try to expedite the payment process. Finance experts suggest that instead of paying once a month, you can pay once every two weeks. It will make your lender calculate anew the interest once every fifteen days. You will be able to save thousands over the years.