Paying off your mortgage before you retire would be the ideal scenario. However, a large number of Americans enter retirement with an outstanding mortgage. This isn’t necessarily a bad thing, provided you are still able to make the monthly payments. Here are a few benefits of carrying your mortgage into your retirement.
Better to Have Pending Mortgage Payments than Credit Card Debt
A mortgage payment is likely to have a lower rate of interest compared to the interest charged on credit card debts. So, if you are nearing your retirement age and have to choose between paying off a mortgage or credit card debts, it’s best to repay your credit card debt first. Given that the mortgage has a low rate of interest, you won’t spend as much on interest payments.
You Can Invest with The Money You Have In-Hand
Rather than repaying your mortgage before you retire, consider investing some of your money in the stock market, given that stock market investments usually attract high returns. That said, given that your earnings in your retirement are likely to be lesser than what you currently make, ensure that you invest conservatively.
You Avoid Paying Rent
The key benefit of a mortgage is that the interest is low and the repayments are likely to be fixed for the duration of the loan term. This may be a better alternative than selling your house, closing your mortgage, and renting a property, given that your landlord may increase your rent each time your lease comes to an end.
You Build Equity
As you keep repaying your mortgage, your equity in your home increases. This a valuable financial tool, given that you can borrow against the value of your home in the future. Continuing your mortgage payments would mean that you get to keep your dream home, which is also a valuable financial asset.
You Can Benefit from The Tax Deduction
Homeowners who are repaying a mortgage can claim a tax deduction for the amount they pay as interest towards the loan. Based on how much interest you pay, this may be a good reason to keep your mortgage payments going.
Repaying your mortgage, provided you can afford the mortgage payments along with the remainder of your monthly expenses, helps you keep a home that fits your needs and reap the rewards of being a homeowner.
