Pay Off Mortgage Question

WalnutCreek Zone 7b/8aJuly 16, 2012

I am retired and will shortly have the ability to pay off my mortgage.

Do any of you have advice/thoughts about doing that, please.

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sushipup1

You might want to try the Household Finances forum. Try a search, because I know the subject has come up in the recent past.

    Bookmark   July 16, 2012 at 11:11PM
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WalnutCreek Zone 7b/8a

Thank, sushipup. I will do the search.

    Bookmark   July 17, 2012 at 6:16PM
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emma

I would pay off the mortgage. You can loose your money through bad investments or being sued. No one can take your home from you except the mortgage company or the IRS.

    Bookmark   July 20, 2012 at 10:24PM
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sushipup1

There is a vast amount of information needed to make this decision including other investments and tax status. No one can give a fast and easy answer.

    Bookmark   July 21, 2012 at 12:46AM
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azzalea

You really do have to make your own decision on this, taking all your personal info into consideration.

I will say, in our case, we recently had to make the same decision.

After living mortgage-free for about 25 years, we bought a second home. It was to be our retirement home, but for 4 years, we lived between the 2, because DH was still working, and wasn't quite ready to retire (and didn't want to commute 2.5 hours a day--can't blame him!). So, of course, the 'new' house had a mortgage. This spring, we sold the 'old' one, we had settlement in May, DH was retiring in July, and we both started taking our SS this summer. So, we got a nice, healthy check from selling our mortgage-free house. Did we use it to pay off the new one (and bump up our savings a little) or should we refinance the new one, and use the windfall for investing and so that we had a bit of a cash cushion should we need it?

I finally realized that for us, it was best to pay off the mortgage. It didn't take the entire amount we realized from the sale, we have other savings, of course--enough to cover most ordinary emergencies. If we did have a catastrophic emergency in the future, we could always sell the house or borrow against it. And between DH's pension and our SS, we'll be making as much retired as his base pay when he was working. Just made sense to us to get rid of the debt. It's nice not having ANY bills other than the current stuff like utilities, insurance, taxes, etc.

But we're the type who really hate to owe anyone anything. Not everyone feels that way, and there are financial advantages for some for having some debt. Have you sat down with your accountant, and gotten his take on the situation? After all, he knows your financial position better than we do and can probably give you the best advice for your specific circumstances.

    Bookmark   August 4, 2012 at 9:16PM
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randy427

I'd say it depends a lot on the status of your other liquid assets. If you pay off the mortgage, there's that much less cash available for emergencies/opportunities.

    Bookmark   August 6, 2012 at 4:56PM
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colorcrazy

Walnutcreek, if you have sufficient savings for a comfortable retirement and can still pay off your mortgage, I would do it. We paid ours off a year ago and love the freedom. But do not do it if you will have to take the funds out of retirement savings. Then it's not worth it.

    Bookmark   August 21, 2012 at 11:26PM
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WalnutCreek Zone 7b/8a

The mortgage has been paid off and, as you stated colorcrazy, the feeling of freedom is absolutely wonderful.

    Bookmark   October 4, 2012 at 4:27PM
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prowlr1

I too paid off my house it is a wonderful feeling. And i know i have peace of mind that it is like money in the bank.

    Bookmark   October 9, 2012 at 8:02AM
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WalnutCreek Zone 7b/8a

Absolutely on target, prowlr. That money can now go in a savings account every month.

    Bookmark   October 11, 2012 at 12:39PM
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colorcrazy

Yep, that is where ours goes. Glad you are enjoying the peace of mind.

    Bookmark   November 19, 2012 at 11:25PM
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susieq07

We could pay off our mortg. at any time, but why?? when we can invest that same money for close to twice the interest rate paid to us and still use interest paid on mortg. as deductable from income tax, seems like a win, win for us!

    Bookmark   March 19, 2013 at 12:11PM
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emma

We have paid off every home we have owned waaaaayyy before the loan was due. It does feel great. It is the best investment you can make. I figured if I ever needed to I could sell my home and buy one for a third of the value and have plenty to live on. It has not become necessary and will not.

    Bookmark   March 21, 2013 at 4:52PM
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jemdandy

It all depends on the interest rate of your mortage. If the interest rate is coniderably above the inflation rate, it pays to pay provided you do not have to dip into funds that are best left alone. Right now, interest rates on mortages are not much more than the inflation rate. One option: Refinance to a lower rate.

Projections are that interest rates will remain low this year and may edge up a small amount in 2014. It will not climb until the economy rebounds more, but when rates start to move up, they may move upward at a good pace.

I have been retired fro 12 years and my house was paid off shortly before retirement. It has been very nice to have retired mortgage free, and has saved money and provide peace of mind.

    Bookmark   March 23, 2013 at 12:12AM
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joyfulguy

I don't see how interest rates can stay low.

When one has major debts, it's hard to find a lender who'll lend a further amount, except at high interest rates.

No only is the U.S. gov't. deep in debt ... but they're printing money hand over fist, Which debases the value of the dollar - who's going to be willing to have the loan repaid in dollars, each of which'll buy a lot less? Let alone be willing to offer larger loans, at a low rate of interest?

Can you see the chickens, on the horizon (or closer), flying home to roost?

ole joyful

    Bookmark   March 28, 2013 at 4:04PM
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joyfulguy

With your mortgage paid off, if you think that you might want more funds than are readily available, in case of an emergency, you might want to consider setting up a line of credit.

I've had one in place for years, that cost nothing to set up, and there is no annual maintenance fee.

I haven't used it in years ... and don't expect to, any time soon, but it's sitting there, in case of need.

By the way - I keep loans for consumption different from loans for investment, whose interest payments are tax deductible, while interest on consumer loans isn't.

ole joyful

    Bookmark   April 10, 2013 at 7:42PM
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patty_cakes

If you have a portfolio with stocks, investments, and such, you might need the interest as a tax deduction. I only owe $85K, but need the deduction.

    Bookmark   October 1, 2013 at 4:32PM
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