Get rid of your mortgage before retiring

If you want to retire in peace without the worry of long term bills weighing on you, there are few better ways than by getting rid of old mortgage debt and not taking out a new one. There are exceptions, of course, as always.

If your assets are such that you are making more by investing than you would lose through debt then you might decide to disregard this advice. However, there is no substitute for peace of mind and no money can necessarily buy it. Each individual must make his or her own decisions. Remember also that under the new Tax Cuts and Jobs Act passed by Congress, you usually cannot deduct on your tax return interest from Home Equity Loans or Lines of Credit.

If you want to start out debt free, here are some ideas.

Make extra mortgage payments

By starting early and adding an extra few hundred dollars to your mortgage payments every month, you can decrease your overall obligation substantially and might pay off the loan years earlier. Some lenders even have an on-line amortization calculator allowing you to compute how much sooner the mortgage would be satisfied and how much would be saved.

Refinance your mortgage but reduce the term

To pay off your mortgage early using refinancing, you will need a shorter term loan. You might reduce the term of a 30 year conventional mortgage to 15 years, for instance. This works best if you refinance earlier in the current loan since mortgages are front end loaded when it comes to interest. Your monthly payments will be higher but you might be surprised. They might not be as high as expected.

On the other hand, if you have already paid 25 years on a 30 year mortgage, you have already paid most of the interest and principal on the cur-

rent loan. In that case, the first strategy of paying more monthly on your current loan would make more sense.

Downsizing your home

Obviously, selling a larger and more costly home and moving to a smaller one can give you cash from the first sale and might even pay for the second purchase entirely. It is up to you whether to downsize recognizing, however, also that there are costs associated with

a move.

Relocate to a less expensive area

When considering a move to another location, whether local or out-ofstate or even out of country, all of the factors including taxes and property taxes must be considered. There is also stress associated with a move so you need to weigh the options. Also consider property tax rates at your new location. Those who intend to move need to research all the factors including the cost of the move.

Share housing or rent

Shared housing works for some as does moving to an apartment. However, apartment living does have some downside. There is no equity and it is easier to be dispossessed from an apartment than from a house. One consideration in getting a roommate is to know the person well since there are security concerns and instances of abuse.

Here are some other possibilities.

Moving in with children or children moving in with you

Business arrangements with children should definitely

be in writing with professional advice and considering all the consequences as a Family Agreement but, with this said, parents often make satisfactory arrangements with their children either paying to add an “in-law suite” to a child’s home or buying properties together.

The written Family Agreement can deal both with estate and family issues and potential Medicaid penalties since rental payment or payment for services without a written agreement can sometimes be considered “gifts” that disqualify parents for Medicaid. So, the important thing to remember is to

have the agreement in writing in advance. Sometimes parents pay rent or contribute to household expenses. Sometimes they “hire” their children to pay for services or care. Sometimes their children pay rent to them. Parents might buy an interest in their child’s home or a child buy an interest in theirs.

There are many ways to deal with debt before and during retirement, both within and outside the family. This is where planning ahead can help.