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Having a house paid off in a state that doesn't gouge you in property taxes (such as California, but there are plenty of others) is peace of mind in retirement.
It's nice to have it paid off, but that alone would not have prevented me from retiring.
Unfortunately, taxes and home maintenance never go away. Property tax and insurance cost me $1000/month. Plus, I retired right about the time my house needed upgrading for just about everything. Remodeling for the kitchen and bathrooms, new carpets, etc. Throw in routine maintenance and.....well, you get the idea.
The actual mortgage is just one small part of home ownership.
In case of an emergency, the money in the bank account gives me allot of flexibility. In other words, if I paid off the house and I needed money for an emergency of some kind I would have to refinance my house again and most likely be paying a much higher interest rate. Also, when you are retired with no earned income borrowing money becomes much more difficult under some of the new lending laws.
Quote:
Originally Posted by Muonic
It's nice to have it paid off, but that alone would not have prevented me from retiring.
Unfortunately, taxes and home maintenance never go away. Property tax and insurance cost me $1000/month. Plus, I retired right about the time my house needed upgrading for just about everything. Remodeling for the kitchen and bathrooms, new carpets, etc. Throw in routine maintenance and.....well, you get the idea.
The actual mortgage is just one small part of home ownership.
I too like the idea of having my house paid off, which I did a couple of years before retirement. I agree with Garthur that ideally paying off the mortgage should not have too much of a negative impact on one's emergency fund. A comfortable emergency fund is very important for peace of mind as well as for practical survival in case of the unforeseen.
Muonic has a good point to the effect that other homeowner expenses will continue despite a paid off mortgage: Taxes, insurance, utilities, and maintenance (with the latter being a potential for some large and unpleasant surprises). So back to that emergency fund idea!
pay very close attention to what everyone is saying here. nooooooo one is saying they are retiring because their house is worth 1 million bucks or 500k or even 100k.
in fact the house as an investment and its value is not even mentioned.
what is mentioned is their expenses were reduced by owning enabling them to retire.
this is a concept i try to get across to people over and over and over.
a home is rarely an investment but a home cuts expenses so you can make do with less income .
not one person mentioned they are retiring because the house was worth x amount and was a great investment . in fact the worth is irrelavant if you are living in it.
post after post refers to the cost cutting ability of the home.
there was another on going discussion in another thread about whether a home is an investment.
i posted the link here so everyone can come here and see your answers and what the true value in a home in ,namely reduced costs that let you make do with less income to retire.
pay very close attention to what everyone is saying here. nooooooo one is saying they are retiring because their house is worth 1 million bucks or 500k or even 100k.
in fact the house as an investment and its value is not even mentioned.
what is mentioned is their expenses were reduced by owning enabling them to retire.
this is a concept i try to get across to people over and over and over.
a home is rarely an investment but a home cuts expenses so you can make do with less income .
not one person mentioned they are retiring because the house was worth x amount and was a great investment . in fact the worth is irrelavant if you are living in it.
post after post refers to the cost cutting ability of the home.
there was another on going discussion in another thread about whether a home is an investment.
i posted the link here so everyone can come here and see your answers and what the true value in a home in ,namely reduced costs that let you make do with less income to retire.
A paid-off home, when sold in later life, is also a major ticket into a CCRC or assisted living. The value of a home worth even $200K is usually the "down payment" for getting in. Not that I'm aiming for that, far from it. But one never knows.
More pertinently, paying off our home, among other long term risk reduction measures, is a key part of our plan for surviving the 50 - 65 age range. Too young for pulling any serious government assistance and too old (seemingly) for certain portions of the job market.
Spot on. I think people need to wake up and realize the real retirement age is 50 or 55 and they should save accordingly. Sure, they might be able to work past those ages, but it will most likely be in low paying employment.
hi, one of our more immediate goals is paying off our primary house in the northern VA area. we are both 32/33 with a couple of 1 year olds. We're scheduled to pay it off in a year and half with the option of then either upgrading to a bigger house...or just living there until the kids go to college, etc.
i wanted to know if paying off the house played a major role in your retirement plans...and how that's impacted your life in retirement. (also would like to hear from you if you haven't paid off your house and are retired, and how you've managed that)
thanks in advance!
Don't know if this would work for everyone, but our goal in retirement was to be as debt free as possible. To that end, we paid off the house we lived in and raised our family in ( from 1985-early 2013). We had a 15 year mortgage on that house, paid it off in 2000. We obtained a large equity line of credit on that house in 2003 ( the amount was less than half of the equity in the house at that point, but we only wanted what we needed and had no intention of wasting it). Our intention for this equity line was to finance the building of our retirement home. Since it took a while to get started on that home, that equity line was the only mortgage and we were earning good money, we used the loan to pay off two cars, buy another car, and replaced that money so we could use it for building the house. We did just that, built the house, used the equity line to pay for a new roof on the old house, as well as other repairs and supplies before we sold it in early 2013. When we sold that house in early 2013, we paid off the equity line, and still made close to a $200,000 profit. And now our retirement home is free and clear, so things worked out just as we had planned. It's also a new house, so we don't anticipate having to replace things for at least a few years.
But only a home has the potential to cut housing costs.
Only a home can stabilize your housing costs, depending on where you live.
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Importance of the emergency fund
