Do You Have a Mortgage?
by admin on Aug.31, 2014, under Real Estate
I heard something on TV yesterday stating that many US homeowners of or nearing retirement age still have a home mortgage to pay.
The musings from the financial pundit seemed to be that people had mortgages at 4% plus or minus, and were putting money into stocks and bonds – trying to gain a little dividend on those – instead of paying down their mortgage.
If anyone out there is listening – particularly if you are say in your late 30′s to early 40′s – get that mortgage paid!
No matter what you think about the economy or the stock market, getting into your mid-50′s and beyond and still having that payment to make each month will be a burden you CAN avoid. And let’s not forget the schizophrenic job market. Finding yourself “let go” from your job is a increasing concern these days. How much better would it be to hit the age of 60 and have NO mortgage left to pay???
This will be hard for those who have the kids and the new cars and the vacations – and for a 20 year span, seem to spend most of what they make. But others, who may be taking dollars each month for a stock portfolio may be shooting themselves in the foot. You can ALWAYS find somewhere to make savings – if you look for them, and making extra mortgage payments is a great place to apply them.
So if you buy a new home at 35 with a 30 – year mortgage, pay on your loan – whenever possible – at the 15 – year mortgage rate, or make an extra principal payment. Poor tax planning got you a larger tax refund than you expected? Put the extra into paying off that mortgage. How good would it feel for our 35 year-old to get to 50 and have a mortgage-free home??? Versus not reaching that point until he, or she, is 65?
I think a lot of people don’t realize that once you get your mortgage, it’s yours to manage. Most loans these days have no pre-payment penalty. If you aren’t sure about yours, check the fine print and shame on you for not checking before you signed.
There are plenty of places online with free mortgage calculators so you can “play” with the numbers. Have a 30 – year mortgage and want to see what you have to pay to be free-and-clear in 15 years instead? You can do it – and who cares if your monthly income didn’t qualify you for the 15 – year loan when you got it. I like Bankrate.com but there are plenty of online resources available to you.
It used to be that having a paid-for primary residence by retirement age was a given. People used to make this a priority. Now, they don’t. Housing prices are high, cost of living keeps increasing, and wages are not keeping up. But if you are just buying your first home now, take this advice from someone on the far side of 50 and consider paying down that mortgage as a financial priority. You’ll thank me later…
Some will say that having too much equity in their home might not be good since they planning on selling and buying again in future. “Too much equity?” There is no such thing. So you pay down your mortgage at an accelerated rate and then decide to sell – and your settlement check is just that much bigger. I don’t see this as a problem.
