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A short time after I retired, a year or two earlier than expected, I decided to pay off the remainder of my mortgage, I think there was about 15 months left. The rate I had wasn't bad & I'm sure I would've come out a bit ahead financially if I had just kept up the monthly installments & the rest of the money in stock funds.
But being a bit nervous with my sudden life change I wanted the security of knowing that I completely owned my home from that point. If some calamitous thing happened I would at least be sure of having a home. I made an emotional choice rather than a strictly logical one which is unusual for me, but I don't regret it at all.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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I like liquidity / available cash. (I may want to travel FT for a few yrs, starting tomorrow)
Home-bodies will have a very different objective / desire to stay home, confidence that they HAVE a HOME!
I will always have a mortgage (2.87%), until I am a renter (I do not view a personal residence as an asset, but instead a liability)
If I did not have a mortgage, I would still carry a $500k+ HELOC in case I found another property I wanted to buy.
I could write a check tommorrow and pay off the house, if I thought that was smart or necessary.
I am a bit jaded from being present when the sheriff forced my parents off their ranch. So... I keep a few extra homes paid off in case I need to flee to safety.
This is a topic that always brings out staunch opinions whenever it comes up. The circumstances are different for everyone.
For me personally, I am a firm believer is using other people's money, whenever the price is right. My wife has always been leery about debt, so sometimes we do not see quite eye to eye.
When we retired to Tennessee, she wanted to pay cash for our house and I wanted to pay 20% down and get a 30 year mortgage. We compromised and paid 50% down and got a 15 year mortgage for the balance. I took the amount of the mortgage and put it in a separate investment account. Every month I take out the mortgage payment from the investment account. After 4 years there is enough in the account to pay off the mortgage and still have $58k left over.
What we did is certainly not for everyone, but it has worked out well for us and we sleep well with having a mortgage instead of a paid off house.
We did something similar to JRR. We built a retirement house, then using proceeds of our work-day house sale, put 66% down at the construction loan closing. We still have a small mortgage, but used the remainder of the proceeds to pay off all other debt and established an emergency fund. Never touched our retirement funds for any of this. Our emergency fund has now grown to nearly 1/2 our retirement funds due to the low debt load and living in a LCOL area- even with a small mortgage. Not all debt is bad, especially ones where the mortgage rate is 1/2 the rate of return in investments.
By the way: the total out of pocket cost for building a new house was just about $10K. Since we owned the land, there was no down payment required for the loan, and it appraised over 20% of the build, so our build would have been $zero to get the house built. We, however, wanted to use our excavator on our project instead of the one the builders normally use, and we paid out of pocket for this. Since that time, the builder now uses our excavator for all their new builds
I paid off my mortgage (and the mortgage on a second home) many years ago. Basically, I looked at what I would pay in mortgage interest vs what I would make on the money in the bank and it was a no-brainer. Absolutely no regrets.
I paid off my mortgage (and the mortgage on a second home) many years ago. Basically, I looked at what I would pay in mortgage interest vs what I would make on the money in the bank and it was a no-brainer. Absolutely no regrets.
Paid off the house many years before retiring. Don't regret it for a minute. Glad to owe NO ONE anything. Grandparents lost a house in the Depression. Could have invested the money but enjoy not having to write that check ( or draft from checking or money market). With this rent moratorium going on now. I am GLAD I don't own rental property or making mortgage payments on that. Then contending with deadbeat renters.
My stock picks and mutual funds have been more assuring( and beneficial) to me than dealing with real estate ( especially here where property values have not seen the big appreciation as other parts).
I'd like to buy a second home in a 55 plus or a good all-ages community. Probably in Northern Florida - St. Johns, Ponte Vedra Beach area maybe.
Not sure yet - starting next year, maybe take a month and start checking out areas.
Thanks for 2 good replies.
My mortgage rate is low - 2.50% - so can't complain there.
I would hope a mortgage broker has a pretty low rate.
We've never tapped the equity in either of our homes, even though the Scottsdale place seems to be inching towards "money pit" status. But you can't live here and NOT replace a failing AC unit. Today's high is expected to be 117.
It's funny; I was planning on dumping some funds into the mortgage but I like seeing it in the bank.
Anyone feel equity rich (home paid off) but cash poor? Do you wish you had kept some aside?
It's kind of like when you have a car payment; somehow, you always make it. But, when you do not have that payment, do you save it? Generally, no.
If you did pay it off, did you tap into the equity later?
We paid it off.
But we also saved the money that would have made the payment.
We have never needed to tap the equity. That is generally a mistake, and here in the retirement forum it can be a serious mistake.
Paying off the mortgage:
Hopefully, we are talking about a 15 year mortgage. We made our first payment and included the amount of principle for our send payment; the next month we paid our 3rd and included principle for the 4th; the next month we paid our 5th...... After 7 1/2 years the mortgage was gone.
We get paid every month from a money market account, which receives all our various incomes.
We paid our mortgage off long ago. When it was paid, we reduced the amount we drew from our money market account thereby automatically saving the money which would have been spent on mortgage and making it available for whatever we needed.
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My actual goal - one of them
