Benefits to Paying Off Your Mortgage Before Retiring
Some people think that should pay off their mortgages before they near retirement age, but others think that they can handle making that monthly payment. Unless you have a large savings account or a trust fund that lets you pay off the total cost of the house when you first buy it, you’ll need to take out a loan from the bank to cover the cost. You’ll make regular payments over 10 years or more to pay off the loan and the interest the bank charges. Those who pay off their mortgages before retiring can enjoy some key benefits.
More Cash On Hand
A key benefit of paying off your home early is that it gives you more cash on hand in the future. You no longer need to set aside a specific amount of your earnings to pay your mortgage. When you retire, you’ll likely make less money than you did when working a full-time job. Even if you work a part-time job or decide to start your own business later, you may not make enough each month to cover the high cost of your mortgage.
No More Deadlines
Any debt that you have in your name is a debt that can make or break your credit worthiness. If you make a payment even a few hours past the due date or the day after that date, the creditor can notify the credit reporting bureaus, which will drop your credit score by a few points. Depending on the amount of debt that you have, remembering when to pay each creditor can be hard. Paying off your mortgage gives you one less debt and deadline that you need to worry about during your retirement years.
When you work with a retirement planning company like Fed Retirement, you can get help planning for those later years and assistance once you decide to retire from the federal government. You’ll likely have a few questions about how you can make extra income and pay all your bills after you decide to retire. One way you can make extra income is with your home. You can use it as a rental property and find a tenant who will pay you a set amount each month. While you can rent out a home you still owe money on, you may have a hard time finding tenants willing to pay an amount equivalent to your mortgage.
Selling Your Home
Many people sell their homes after retiring because they no longer need such a large home. While you might need more space when raising your family, that larger home can cause you problems during your later years. You may have a hard time cleaning the home, climbing the stairs or paying your utility bills. If you pay off your mortgage before you retire, you can sell your home later without worrying about how much you will get back after paying the balance due to the bank.
Your retirement years serve as your chance to finally relax without worrying about working or making money. If you still owe on your home loan though, you’ll likely have some worries on your mind. Paying off that mortgage early lets you sell or rent the property and avoid monthly bills and due dates.