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.

Investing in Real Estate after Retirement is Advisable

Real Estate Investing

Retirement is a stage when you can no longer work hard, so it is the best time to invest in real estate, provided you do not owe any debt. The value of housing has taken a hit but prices will return as the economy improves, so it is a great idea to invest in real estate. However, since after the recent economic meltdown people are unable to afford to pay the huge amount of money for investment, they are obtaining mortgage. But when they default on their mortgage, they go for mortgage refinance. Nevertheless, before investing in real estate, consider some factors so that your investment proves to be a right decision.

Location: This is one of the most important factors to be taken into account while investing in real estate. Having a house in good location and at good neighborhood is extremely important after retirement. Make sure the house you buy is close to hospitals, post office, shopping malls, and police station. Many over retirement homes in over 55 communities are selected because they have great desirable locations.   Also, buy a house that is close to your friends and relatives.

Design: This is another important factor to be considered. Before buying a house, check out the design of the house, if possible. Make sure, the house has all the essential facilities, such as laundry. Also ensure that the rooms in the house are proportionate.

Services: After retirement, people seek for comforts and services. So if you are planning to invest in real estate after retirement, make a list of all your preferred services and specific requirements. While looking for a house, make sure, your preferred services and requirements are available near your house. For example, home maintenance, nursing aids, and other significant services.

People mostly stay away from investing in real estate after retirement since it requires huge amount of money to invest. But there are several advantages that you must know. So let us have a look at each of them.

Ownership feeling: Owing a house is really a special feeling and that is the reason why people try to buy a house in their life. Having an own house gives you a feel of ownership that matters a lot in old age.

Can implement your personal choice: All individuals have certain dreams and desires which they want to implement after retirement. At this stage people look forward to own a house and decorate it as per their choice. Not only this, they also want to renovate the house or make some modifications according to their comforts. And this is only possible when you have your own house.

Avoid paying rent: Buying a house is a better option than paying rent to the landlord.  Senior apartment communities are expensive.  This will save you money, which you can spend for your other interests. You may invest in the education of your grand children or in a luxurious life in your dream city.

Earn some extra cash: If your new house is spacious enough, you can think about utilizing the space in various ways to earn money. You may set an office to start a business of your own or rent a room or two and earn a considerable amount each month.

In the meanwhile, many senior citizens are falling into debt because of the recent financial upheaval and economic devastation. So they are looking for some resources or grants that can help them with financial assistance.

Home Buyer Training Classes:

State community action partnership agencies conduct training classes for people who are going to invest in real estate for the first time. Depending on the program, these agencies even aid first-time home buyers with down payment assistance programs.

Conclusion:

Thus, it is to be concluded by saying that investing in real estate after retirement is a good option since the value of housing is incessantly increasing. So investing in real estate can secure the path of your financial future. However, before investing, keep the mentioned factors and advantages in mind.

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.