Should I pay off my mortgage before I retire?

Terry, I’m a 66 year old female who is still working with a gross salary of approximately %55,000 a year. I also receive my late husband’s social security which is approximately $1750 a month. I also receive a widow’s pension from my late husband’s employment and that is approximately $850 a month. I owe $28,000 on my home. The interest on my mortgage is 7-1/2%. My payments are $580 per month and I pay $350 per month in assessments for my townhome. I will be purchasing a car this month so I will have a new car note. I also plan on retiring when I’m 70. Should I pay off my mortgage by the time I’m 70. Should I take out a home equity loan for a lower interest rate, pay off the mortgage and maybe then pay off my car. Thank you for your time and your answer.

Terry Says:   Well, it’s insane that you’re paying on a 7-1/2 percent mortgage, especially since you are employed and could qualify for a lower rate.  That’s where to start.  Contact Leslie Struthers  (Leslie@guaranteedrate.com) to start by refinancing your current mortgage. You could take a 5-year loan, perhaps an adjustable rate mortgage for 5 years with VERY low current rates guaranteed for 5 years.  Then you could ask for an “amortization schedule” to pay off the loan over the next 5 years.  That would get you debt-free by the time you retire.

Now, I’m assuming that you want to STAY in the home beyond retirement.  Remember, you may retire but your housing expenses won’t!  You could need a new roof, or furnace after you retire.  You don’t mention any savings, and I’m concerned that you want to take  a car loan — even at very low rates.  I advise being completely out of debt by retirement.  And if you don’t have savings enough to buy this car, then maybe you want to reconsider the burden of owning your home — and instead investigate senior living communities, etc as a potentially less expensive alternative in the long run.