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Retire mortgage free: Make your golden days financially safe


How-to-retire-mortgage-free

You may be thinking of paying back your mortgage as soon as possible. And it is a good habit to do so since the joys of a relaxed retirement may turn sour too quickly and become harder, if you continue to owe your lender even after hanging up your boots.

Here’s a basic outlay of the game plan you can adopt to quell your mortgage debt obligations before you retire.

Mortgage debt repayment strategy
The ideas of tackling mortgage debt discussed here will help you to achieve complete freedom from your financial burden:

  • There are more alternatives than before - As far as personal finance experts are concerned then for them any financial plan worth in gold should provide you with multiple options to bank upon. For instance, you are planning to relocate to a place and may not want to stay put in your present house for long. Then in such a case, you can certainly mull over selling it at a handsome price and use the proceed to move into a smaller accommodation at a serene, countryside home. But, if you’re already too indebted, then you’ll have limited choices to make.

    In that situation, you may have to work part-time to supplement your income or use your retirement nest egg to pay off your debt. It’d would be great if you owe nothing to anyone. If that is true, then you can move about from one location to another or decide to work or not during retirement much more arbitrarily.

  • Reduce mortgage to reduce cost overheads - When you have less to no debt obligations to service, then your overall living cost will also come down. This will eventually help you to make your ends meet on lesser income than otherwise considered as insufficient. Moreover, having no mortgage loan to payback in retirement will cut down on your personal break even point. And this is quite a blessing, especially when retirees like you have to live by on a fixed source of income.

    Suppose, you are required to pay $1,500 toward your mortgage loan every month. However, if you can pay off your loan much ahead of your retirement, then you’ll probably have around $18,000 extra each year in your pocket.

  • Fatten up your monthly debt payments - If you have procrastinated all these years and that you've neared your retirement, then it is best to double up your monthly mortgage payments in order to make up for the lost time and to repay your loan before you hit retirement. Paying back what you've borrowed shouldn't come as a troublesome task. You just need to be consistent in making the monthly repayments and diligent enough to save a portion of your income in some of the retirement vehicles of your choice - be it 401(k) or Individual Retirement Account (IRA).

    To avert falling back on your promise, you can make two mortgage payments in a month. This way you would be able to cut down your loan’s term almost by half as well as the overall cost of the loan. When you start making extra mortgage payments, then you may add another $100 every month to that amount. If you can afford both, then you’ll be lucky to have your mortgage paid off a lot earlier than its actual maturity period.

  • Put your home equity to good use - If you, like most others, haven’t saved enough for your retirement, then you can look forward to utilizing your home’s equity as a means to supply you with the much needed cash to pay back your existing mortgage debt. Basically, it could act as an additional source of fund in emergencies. Truly speaking, once you've retired, it is unlikely for you to require a big house as you did when you were younger and employed. When needed you can readily sell off your home and instead move into a more affordable house that is less demanding on your pocket.

    This will actually be a boon since you can always put any extra amount of money into your retirement accounts and in turn boost your nest egg. Yes, the amount you put into those accounts as savings may be far from being sufficient, but it is certainly not a waste. But, all these are only possible, when your home has equity and it is built through regular mortgage payment.

The bottom line is, paying off one’s mortgage debt is one of the most important goals anyone should have in their retirement plans. The same holds for you as well. Remember, when you are rid of your mortgage loan, then you automatically secure your financial life. This is something worth struggling for. So, be judicious and invest your time into thinking about your retirement days.

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