Should I Pay Off My Mortgage–Yes or No?

Ready To Retire!

There is no one-size-fits-all answer to the popular question of whether or not to pay off your mortgage.

Instead, it’s helpful to get clear on what makes the most sense for your current and future life by considering your goals, values, wishes, and desires, and where you want to be in the next 5, 10, or even 50 years.

In this episode, I offer an easy framework to address your mortgage questions as well as possible solutions if you want to pay off your mortgage early.

Framework of Mortgage Considerations:

1. How long are you planning on living in the house?
2. What is your current income level and how easy is it for you to make payments?
3. How much have you accumulated in your after-tax savings accounts and/or have you received a large lump sum?
4. Where are you with transportation payments?
5. What does your mortgage look like right now?

Three Ways You Can Pay Off Your Mortgage Early:

1. Downsize—Use equity from selling your current home to buy a smaller home or a home in a less expensive neighborhood.
2. Make additional monthly principal payments—Talk to your bank or use an online calculator to figure out how much you should pay each month to pay off your mortgage early.
3. Use a lump sum from an inheritance or sale of an asset to pay off the balance—Do so with caution and understand the possible tax consequences.

I hope this framework and potential pay-off strategies make mortgage decisions less complicated as you determine what’s best for your personal goals.

In this episode, you’ll also hear:

• Saving for an adventure fund vs. rainy day fund
• When it might make sense to pay off your mortgage
• The power of getting clear on your financial goals

Must-listen moments:

[00:11:55] Once you have an excess amount in your adventure fund, then you can spend it on something really fun and really exciting. We like to recommend having at least six months of net spending if you are single or in a single-income family, and three months of net spending if you're in a dual-income family.

[00:22:14] I still feel strongly that you're better off to pay off, to use those funds, to pay off your mortgage…You can sleep in your house, but you can't sleep in your brokerage statement.

[00:23:50] There's absolutely nothing wrong with having a mortgage payment when you retire, especially for those people who have a majority of their retirement funds tied up in tax-deferred vehicles like 401ks or IRAs.

Thank you for listening! Please share this episode with 2 friends you think need to hear it!

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This podcast is for informational purposes only. The situations used herein do not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted for your specific situation. Neither Commonwealth Financial Network nor your representative provides tax advice.