Is Paying Off My Mortgage Early a Smart Plan
by Homeowner in USA
Ask Kate if paying off your mortgage early is a smart plan: Hello Kate, I have an under water mortgage, roughly $438,000 balance. The houses in my neighborhood are selling for $350,000. I'm 22 months from retirement. I have been sending extra $500 to the principle balance for the past 3 months. Should I continue to pay down on the principle balance of my mortgage?
Or should I just put this money towards my supplemental 401k?
I'm not in a position to refinance because I have a non-government backed loan. I hear that HARP 3 may pass at some point.
I'm currently under the Civil Service Retirement System retirement plan and the 401K is just supplemental, I have about 5K invested thus far.
I do not qualify for Social Security, but my CSRS will be substantial percentage wise.
Your thoughts would be greatly appreciated.
Kate Answers: Is Paying Off My Mortgage Early a Smart Plan
Because I'm not a financial adviser, I don't assume to know if it's wiser for a homeowner to pay off their mortgage early versus
using the same cash to increase a retirement plan.
However I certainly commiserate with the many homeowners who have a strong desire to eliminate their home loans and ongoing indebtedness to the banks.
But like flipping a pancake, the other consideration is the need to provide for retirement. Is there a way to do both?
Pay Off a Mortgage Early without Harsh Sacrifice
Actually the question should be... Is there a way to pay off your mortgage early without sacrificing today's lifestyle and the ability to care for yourself in the future?
As with other meaningful resolutions, from improving credit to going to the gym, most of us fueled by the best intentions have eventually grown weary of sacrificing our lifestyles.
I once originated a mortgage for a couple who resolved to enter retirement without debt by refinancing into a 15 year term. But within a year or so, they returned for a 40 year adjustable rate to ease the financial strain. They were tired of life revolving around their house payment, they explained to me.
Most of us have a limited amount of eggs in our baskets and want to place them wisely. But where should they be allocated... Early mortgage pay-off or retirement?
Pay Off Your Mortgage Quickly to Beat the Bank at Their Own Game
Besides finding a balance between having a life, affording a house payment, and planning to retire, many homeowners, plain and simple, are tired of paying interest to the bank.
I'm not bank-bashing, but it's simple to understand why lending institutions insist on amortization. On an average, homeowners do not keep mortgages until they are paid off. Yet for the first 10 years, monthly payments barely reduce the balance owed. However the bank gets paid over and over, especially as homeowners refinance or sell homes.
Wouldn't you like to beat the bank at their own game? And in the same manner, pay off your mortgage early without
sacrificing your lifestyle, or in your case, a supplemental retirement?
I can show you how!
The Mortgage Freedom Project
If you'd like to know more about my unique plan to pay off your mortgage without harsh requirements, take a moment to go to The Mortgage Freedom Project
where I introduce my book. The Mortgage Freedom Project
will show you how to quickly pay off your mortgage without siphoning off the cash you plan to put towards your retirement fund!
Or maybe you know someone who is primary concerned with getting out of debt. The Mortgage Freedom Project
will walk them step-by-step through my plan to become debt-free without coming up with extra money (or giving up simple pleasures).
Find more about Ask Kate's plan to pay off your mortgage early at The Mortgage Freedom Project
. There's no time like today to begin!
Good luck and best wishes,
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