Should I pay off my mortgage?
Should I pay off my mortgage?
I’m inclined to think so but please check me on this. I would like the condo paid as I head into the final chapters and stay home as long as possible, hopefully until the very end. To my way of thinking, should I need support, I can preserve the home and use savings/investments/income to pay for services but if I have investments, I would have to spend them down while continuing to pay the mortgage.
But paying off a mortgage is the easy move, I understand paying off a mortgage. Investing is new and I don’t know where to start.
I am retired widow ag 64, 65 in September, 2026 with a monthly income of $7,700 from a pension and hubby’s social security.
I have $415,000, 20% in IRAs, 80% in money market while I figure out my next steps.
The mortgage balance is $259,000. It is 30 year conventional @ 6.625%. At $2,027 a month ($357 for escrow) it will be paid off in Oct, 2055.
It was quite the surprise to inherit a sizeable chunk of this from my parents. I have never had this much money before in my life and I’m stuck trying to figure out my next best move.
I appreciate your help and guidance.
Terry Says
OK, there’s a lot to unpack here, behind the numbers.
1. Do you REALLY plan to stay in this home for many years? Or is it possible that you’ll move to a senior residence in coming years?
2. Have you done a spending plan for your retirement years — including the costs of property taxes, insurance, Medicare premiums and supplement, and all the other things that come along? That could factor into your decision about where to live.
I can completely understand your desire to pay down your mortgage if you really plan to stay in this condo for at least 5-10 years. And the way I look at the math, you would still have money left over in your IRA — and some outside your IRA — if you used the MM fund to pay off the balance.
The rate on your mortgage is no bargain — and you’re getting far less on the MM fund. So, assuming you have no other financial issues that didn’t appear in your question, I would be perfectly comfortable paying down your mortgage. But please do the cash flow implications of managing your lifestyle without a mortgage based on your income. That’s financial-speak for “make a budget”!!
