Mortgage in retirement
Terry, I am age 67 and seriously considering retiring in appx. 6 months…would like to hang on longer but job is very stressful and I want to begin having some fun. I currently have mortgage balance of appx. $102,000 and owe $14,000 on a $60,000 line of credit HELOC. While I plan to pay off the $14,000 within the next 6 months, I am wondering if I should re-fi, pay off the HELOC and take some money out of my equity to pad retirement savings. I have $170,000 in 401K, $25,000 in emergency savings and expect a healthy pension and social security when I retire.
Complicating the decision is that I have appx. $190,000 in equity and after paying the HELO balance, would have a $60,000 line of credit in case of future illness. Long term policy may cost may increase significantly once I retire to the point where I may discontinue.
Your advice would be greatly appreciated!!!
Terry Says
My advice is that you need a financial planner — because there’s a lot more at stake than your mortgage payments!
But here are some things to think about:
Yes, definitely pay off the line of credit.
A Refi depends on your current interest rate. If you can get a lower rate, then do it — but don’t extend your maturity of the loan. Do it while you’re working and can get a refi.
AND, DONT take money out for savings — because that is surely a losing proposition. If you keep it safe in a bank you’ll earn less than 1% — and pay taxes on the interest, while you’ll be paying more than 3% in interest. That is NOT a good strategy.
Do you have an estate plan — a revocable living trust?
Will you be able to continue paying on your LTC policy — and will it provide enough coverage to at least get you into a good facility (later accepting Medicaid) if you do need care?
Can you afford your house in retirement, or should you be thinking of somewhere else to live??
Those are all issues to be discussed with a FIDUCIARY FEE-ONLY Financial planner — who is not trying to sell you something.
Find one at www.Wealthramp.com.
