Why should a mortgage be paid before retirement?

After the recent colossal economic crisis, when people are running out of cash and wondering how to afford to buy a house, a mortgage is an answer. But before obtaining a mortgage, people must keep certain factors in mind. They must determine what kind of mortgage would be suitable for them and the interest rate attached to it.

In recent times, taking the advantage of a mortgage, people are incessantly buying a new house. This has increased the rate of houses being sold. Mortgages can be obtained at any age and it necessarily takes the span of 7 to 10 years to be repaid. However, people are generally being suggested to repay the mortgage loan before they retire.

Now people may want to know the reason behind this suggestion, so here are the three main reasons.

  • Retirement is the age when people lose their capability to work hard and earn money. This is the time when they need to have a comfortable and debt-free life.  A mortgage payment typically involves 20 to 30 percent of the monthly budget. So, if the mortgage is paid, retirees can manage their finances more comfortably, especially if they live on a fixed budget. It saves them considerable money, which they can spend towards their medical expenses or holidays.
  • Pay-off the mortgage prior to retirement also provides people a long term care. Having equity in a home is considered as an asset, which can be used for many other purposes in life or during the time of emergency. In the event retirees should need some cash, they can consider selling the residence or securing a reverse mortgage in order to meet the needs.
  • It also gives peace of mind to the retirees. Paying off mortgage prior to retirement helps people achieve stress free and tension free life.

Paying off a  mortgage before retirement requires some prior planning. If you find your existing mortgage extending beyond your expected retirement date, apply some strategies.

  • People who are in mid 40s and on the front end of a 30 year mortgage repayment can refinance their mortgage to a fifteen year mortgage. This may increase the monthly payments, but will reduce the span of mortgage repayment from 30 to 15 years.
  • Another viable way of repaying the mortgage as early as possible is making additional principal payment each month. Many mortgage lenders allow borrowers to pay more than minimum monthly payment so that mortgage is paid earlier. This reduces the overall interest charges as well as the span of mortgage repayment.

In conclusion, almost 70 percent Americans own a house, out of which 35 percent are mortgage-free during retirement, so if you also prefer a stress free life after your retirement, take the necessary steps to achieve the goal.

This is a guest post by K. Craig who is a financial writer associated with various finance related Communities. He has been providing advice on debt relief since 2007 and also written some great articles on bankruptcy, mortgage refinance, credit counseling, credit repair, debt management, personal injury and so on.

Understanding Your Retirement Needs

It does not matter how old you are.  If you are currently working in a job that has you gainfully employed you should be thinking about your retirement.  Many people will think that because they are young and not even close to retirement age that they do not need to worry about it.  This belief is the furthest thing from the truth.  There are many different things you should worry about and understand before retiring.  If you do not have certain items and situations set into place by the time you retire you could find yourself needing a loan for bad credit.  That would not be a good place to be considering that retirement should be joyful and fun.  The article below will help you to understand what your retirement needs should be.

After Retirement Plans

Most people after retirement wish to live the same kind of lifestyle as they were living when employed while others do not care if the lifestyles they have changes so they have the opportunity to retire.  That is all a personal preference.  When thinking about this decision it is important to include housing costs, as well as how much traveling you plan to do and basic living costs such as a car, fuel, food, clothing and entertainment.

Current Income

Another very important fact to consider is how much your current income is bringing into the household.  After retirement most people will want to continue living the lifestyle that they currently have.  In this case you should be secure in the fact that your current pension will give you the same amount of income every month as you are currently making.  If it is not going to you might want to reconsider your thoughts of retiring or plan on taking up a part time job that will help to supplement your income.  It is also important to put a little of your monthly income back into your retirement account.  This will be able to help you when the cost of living increases as it always does year after year.  If these precautions are not taken it is possible that your credit will take a negative hit.  When this happens it is almost impossible to obtain a long and you will end of looking into loans for bad credit borrowers.

Social Security

Often times when a person is considering retiring he or she will depend on the savings account and their social security check instead of a pension.  However many people do not know how much to expect in social security every month and have no idea how to find this out.  Each year everyone is sent a statement from the Social Security Administration.  This statement will show you an estimate of what you social security income will be every month if you choose to retire at that time.  You should remember that these are not actual figures but an estimate.  You should not depend on the exact amount listed.

There is not a set age limit required for you to retire it will all be a personal decision.  You should keep in mind all of your financial needs before you make the step into retirement.  When you retire it should be a fun and carefree time of your life.  By being prepared the correct way you should be able to enjoy this time of your life with no worries.

This is a guest post by Janice Thompson.

Retirement – Are You Ready and Can You Do It?

Retirement – When Does It Begin?

Looking forward to retirement is the current pastime of many of us 50+ years old boomers.  Anticipating our retirement and what it will be like is a pleasant thought.  They say you really don’t know what retirement is until you actually retire.

The expected benefits are many: having more time, doing things we like, making new friends, traveling, experiencing new things, less stressful life and a better balance between work and play.

Using the new definition of retirement as being a better balance between work and play, when do we pull the trigger and consider ourselves being in retirement? When you leave your full time career job?  When you start drawing social security somewhere between age 62 to 66?  Or when you say so?  Many people find it hard to say they are retired, even after they have retired.

Some people ease in to retirement. They start working from home doing consulting or a Internet business.  People start working part time or take some time off then jump back in for a while. Some people move to a 55 plus community on the edge of a metro area and still work full time.  All of these are the transition to retirement and help easy the process. The exciting part is actually starting the process for a better balance of work and play in our life, no matter what you call it.

Robert, age 62 and retired