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How to Retire Without a Mortgage

Heading into retirement without any monthly mortgage payments to worry about not only provides peace of mind, it also frees up some of your income to spend in ways you’d prefer to spend it once you have a lot of free time. So how do you retire your mortgage before your retirement? Here are some tips:

Pay extra. By making extra mortgage payments or paying more than your monthly payment, you can not only save money but also retire your mortgage earlier. For example, if you paid just $100 more per month on a 30-year, $225,000 mortgage at 5%, you could retire that mortgage five years earlier and save around $40,000 in interest.

Refinance. If you have a lot of years left on your mortgage loan, you may want to consider refinancing to a shorter term loan in order to pay it off faster before retirement. For example, a 50-year-old person with 25 years left on a 30-year, $225,000 mortgage at 5% would not be mortgage-free until age 75 and would pay around $155,000 in interest. By refinancing to a 15-year mortgage at 4% and paying a little over $300 more per month, that person could save $87,000 in interest and pay off the mortgage by age 65.

Downsize. Selling your big home and downsizing to a smaller home in the same area not only lets you stay close to family and friends, you may be able to pay cash for that smaller home and enter retirement with no mortgage. Some retirees are opting for alternatives like condos or townhomes, or even RVs.

Move to a cheaper city. If you live in an expensive city, consider moving to a cheaper locale. When making your plans, be sure to take taxes into consideration as well as housing prices. Property taxes can vary greatly between states, so look for a tax-friendly location for your relocation.

Rent. Renting provides retirees with many attractive advantages, chief among them is that you no longer need to worry about maintenance or property taxes. In addition, the new tax law has lowered the amount of debt on which you can deduct interest and doubled the standard deduction, so home ownership is no longer as attractive a tax strategy as it once was.

Contact our Fort Myers elder law attorney for a complimentary consultation on estate and retirement planning.

Categories: Retirement Planning
dorcey law firm
The Dorcey Law Firm, PLC - Fort Myers Attorney
Located at 10181 Six Mile Cypress Pkwy, Suite C, Fort Myers, FL 33966
Phone: (239) 330-6674
Local Phone: (239) 418-0169
Website:
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