As you are nearing retirement, it is not uncommon to consider paying off your mortgage loan. Before you tap into your retirement savings or other cash reserves to pay off the loan, you need to weigh the pros and cons.
Paying off your mortgage means no more monthly payments on your home. You can use the money on other things you enjoy, like traveling.
Another benefit is that owning your home clear and free can give you peace of mind. You do not have to worry if things are a bit tighter financially once you retire.
You could protect the value of your property and avoid getting into a situation where you owe more than the home is worth, which affected many people when the housing bubble burst about ten years ago.
You will lose any tax deductions you currently receive on the mortgage interest. While these might not be much, they do help reduce your tax liability.
You could find yourself short on cash resources in the future, which could affect your ability to pay other obligations. It might make more sense to pay off higher interest credit cards and debts first, before your mortgage.
Other investments could yield a higher return. Rather than pay off the mortgage, you may want to consider refinancing at a lower interest rate and use your cash to invest in bonds or other investments with a higher interest return rate.
To learn more about refinancing options for your home or to find out current interest rates, please contact Elite Financial at (805) 494-9930 today.