After his retirement, it is best to pay my mortgage. return equity loans and payments.?

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I live in Charlotte, NC, and plan to retire in July 31, 2009. I’m getting old to 66 years. I expect my mortgage loan and equity pay out more money available. The two loans equal to $ 1,125.00 per month. Is this a good idea, or should I invest money with the money I’ll have time. Overall, the money would be $ 460,000.00.
Mortgage and equity loan, you have a better interest rate than other products? not an equity loan will have an advantage or is it the same thing if I was really more about a mortgage?

  1. Reply
    February 10, 2011 at 12:35 pm

    When you retire you should try to be completely and utterly solvent . Count your blessings when you look upon what you have left over and from that day forward absolutely live within your means . No credit cards debt and no large purchases for which you cannot pay cash . That includes a new car . Either you have the money saved or you do without . That is my opinion and that’s how I live. It works . Nothing is worse than having no money and no way to earn any extra . There are a few menial jobs around but the idea is for you to have fun, travel a little, have a hobby and take your significant other out to dinner .
    Remember that right now at your age you probably still feel good . Believe me it goes down hill in no time flat . Whatever it is you plan on doing, don’t wait . It is easy to postpone things and miss out .
    Debt free and secure, that’s the motto.
    Good Luck and happy days to ‘ya .

  2. Reply
    February 10, 2011 at 1:19 pm

    Remember when planning for retirement:
    4% of the $ 460,000 can be an income year to year, so in your case about $ 18400 a year or $ 1525 a month for the first year adjusted annually for stock and bond performance, or lack thereof.
    So if you reduce the lump sum, $ 460,000, to say $ 300,000, your income would be reduced to $ 1000 a month, but without a mortgage payment (interest).
    If I were you, I would go great guns to try and eliminate at least the equity loan prior to retirement. If you have a low fixed rate on the mortgage and no other debt, then continuing to make the mortgage payment while drawing a lower income (say 3% of the $ 460,000 for a couple years) so later, your income can grow year to year faster.
    The above examples assumes you are investing in an actively allocated portfolio in stocks and bonds with a ratio of 65-35% respectively.

    Essentially do both as you can.

  3. Reply
    February 10, 2011 at 2:18 pm

    If you are planning on selling the house then i would not pay it off instead let procedds from sale pay it off and then invest the money.But if you are going to stay there you could pay off the mortgage but don’t pay off the line of credit because a retired person has a very hard time getting new loans.With your line of credit open you are then in controol of your finances instead of someone else.You are 66 and i am sure you will need a new car sometime before you pass on.

  4. Reply
    sampath k
    February 10, 2011 at 3:03 pm


  5. Reply
    February 10, 2011 at 3:09 pm

    I think it’s a great idea to have your mortgage paid off by the time you retire. You likely aren’t getting a tax break with it anymore since the mortgage is probably closer to the end of its maturity than the beginning. Plus you will not have to worry about this big payment, so you won’t have to draw as much income from your retirement acccounts. Additionally, if your health starts to deteriorate and you really have to dip into savings, it will be good not to have to worry about making that big mortgage payment (or losing your home).

    However, this does depend on how much of the mortgage you have left. If you have less than $ 40,000 on your mortgage, I would go ahead and (gradually) pay it down before you retire in 2 years. But if you have a large balance remaining, don’t take out a huge chunk of your retirement funds just to pay it off. Increase your payments but don’t try to pay it off completely in 2 years. Aim instead for 5 or 7.

  6. Reply
    ron d
    February 10, 2011 at 3:22 pm

    Some don’t want to refinance there low fixed rate, so they just get a equity loan. A line of credit is like an open credit card, you only pay back what you use.

  7. Reply
    February 10, 2011 at 4:00 pm

    What you pay in interest is based on the risk involved in the loan. The standard is a purchase money mortgage – you’re using the loan to buy a home. If you are refinancing a loan without increasing the principle and lowering the monthly payments, your risk decreases so your interest rate decreases. If you are refinancing and taking money out of the house, which would include an equity loan, your interest rate increases.

    While an Home Equity Line of Credit, or HELOC, will carry a higher interest rate – not only is it taking equity from the home, but it has second lien position – you will avoid carrying a higher interest rate on the remaining principle of your home, so it may be the better choice for you.

    Have a lender or broker run the numbers both as a cash-out refinance and an equity line and see which gives you the lowest overall payment.

  8. Reply
    Rob D
    February 10, 2011 at 4:23 pm

    A mortgage will likely be at a lower rate, but will have closing costs and will take longer and require more steps to approve. Most lenders offer equity loans with little or no fees, and the underwriting is much quicker. However, if your credit history is poor, you will have better chances getting a mortgage refinance approved. The best advice is to use a local broker who can advise you on the best solution in your situation, then shop for the best rate/lowest fees using a single inquiry on your credit.

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