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I get the point of not making accelerated payments. But the mortgage still has to be paid. OP's FA is making a good suggestion. It's a way to protect the home investment from being a burden on the nest egg. Argue as you will. Having no mortgage you make payments on in retirement makes sense. Having a HELOC makes sense especially if you do not have passive income (pensions or annuities). That gives you flexibility in the event you need ready cash for big ticket items.
It makes no sense to jump into a mortgage as you enter retirement.
I'm also not suggesting that OP pay off the mortgage any faster. That makes no sense either. Only if OP happens to get an infusion of cash from something like the sale of another asset (house or business).
I agree it's a safer choice or option. Some of us here are risk takers. We slice and dice for the best outcome, mostly for fun. We like to think we can beat the average. The emphasis on on think.
I agree it's a safer choice or option. Some of us here are risk takers. We slice and dice for the best outcome, mostly for fun. We like to think we can beat the average. The emphasis on on think.
Or they know more about their financial situation then they disclose here. One of the things we rarely talk about here is the size of our after tax non retirement accounts. That enables you to access funds with a minimum tax hit. If one has six figures and up that can create flexibility along with monthly discretionary income flow. MathJak is loaded across multiple accounts and that gives him a unique perspective
I agree it's a safer choice or option. Some of us here are risk takers. We slice and dice for the best outcome, mostly for fun. We like to think we can beat the average. The emphasis on on think.
For us, it wasn't as much thinking we could beat the average as it was having financial flexibility. It is worth it to us to pay 3.25% on a declining balance to not have so much tied up in the house. This way I can work our IRA distributions to take out only the amount that keeps us in the 15% tax bracket and use other things to keep the cash flow we need for the mortgage until I take full Social Security at 70. Depending on someone's specific situation, there can be a ton of moving parts to assemble. One size definitely does not fit all.
We are nowhere close to being in Mathjak territory when it comes to assets; just trying to do the best we can with what we have.
Another aspect of paying off one's mortgage in/before retirement is that getting a HELOC has become a complex and difficult process. Thus, if OP wants to keep funds available at a low interest rate, it would be better to NOT first put those funds into a mortgage.
I was thinking that I would use HELOC funds (perhaps 20-percent of my home value) - to help my daughter with a new home (rather than withdrawing high tax rate funds from deferred income funds). In the past, it seems like HELOC's were virtually a signature loan process (we have a paid off mortgage and 800+ credit rating).
Wow! - Was I ever surprised when I found that a HELOC has now become a 60-90-day process - requiring as much documentation and detail as a first-time buyer - and involving a higher than prime interest rate with very limited loan terms. (I decided to go another direction and avoid this hassle).
As far as I know, you can't get a HELOC once your house is paid off. In order to have a second mortgage, you need a first. I tried it once and was offered a "low rate credit card" instead. The first time buyer thing sounds like they were setting up a new first mortgage.
Or they know more about their financial situation then they disclose here. One of the things we rarely talk about here is the size of our after tax non retirement accounts. That enables you to access funds with a minimum tax hit. If one has six figures and up that can create flexibility along with monthly discretionary income flow. MathJak is loaded across multiple accounts and that gives him a unique perspective
about a 50/50 split between retirement and brokerage , not as loaded as i would like to be . don't forget by nyc standards vs most of the rest of the country , we are miles a part on the cost of what we call a middle class lifestyle
Well I guess I'm not as smart as some here, but its nice not to have a mortgage payment right now in retirement.
I suppose if I had lots of cash and investment income to play with, maybe a nice pension, steady almost guaranteed each month sure why not have a mortgage. Unfortunately most of us regular folks don't have that luxury, so getting rid of that monthly payment can be nice in retirement.
Paying off my mortgage (sale of home) guaranteed me no more monthly payments. No such guarantees investing in the stock market etc...
As far as I know, you can't get a HELOC once your house is paid off. In order to have a second mortgage, you need a first. I tried it once and was offered a "low rate credit card" instead. The first time buyer thing sounds like they were setting up a new first mortgage.
Maybe things have changed -- it's been awhile.
I paid cash for our house when we transplanted and got a HELOC after. Never had a mortgage on the house.
about a 50/50 split between retirement and brokerage , not as loaded as i would like to be . don't forget by nyc standards vs most of the rest of the country , we are miles a part on the cost of what we call a middle class lifestyle
Get real I can do a reasonable guesstimate of what is in your brokerage and it is a retirement game changer especially on this topic.
Well I guess I'm not as smart as some here, but its nice not to have a mortgage payment right now in retirement.
I suppose if I had lots of cash and investment income to play with, maybe a nice pension, steady almost guaranteed each month sure why not have a mortgage. Unfortunately most of us regular folks don't have that luxury, so getting rid of that monthly payment can be nice in retirement.
Paying off my mortgage (sale of home) guaranteed me no more monthly payments. No such guarantees investing in the stock market etc...
on the other hand even without the guarantees the market returned enough to buy multiple homes over the decades instead of just 1 with the same amount of money put in . . nothing is guaranteed , not even the fact you can still afford the real estate taxes on that paid off house .
retirees are seeing that in the tristate area. the 30-40k homes they bought 30-35 years ago which are now paid off have 12-16k in real estate taxes which make them unaffordable . the fact the mortgage is paid off does not represent even the utility bill they have today.
you never know how things will turn out either way .
Even with conservative asset allocation, I still beat my mortgage rate.
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