In some ways I don't look at my home as a financial investment. It's simply a place to live. But when I think about retiring, I realize my house is a critical part of the retirement equation. In fact, it would be virtually impossible for me to retire comfortably without my home. At the same time, I don't have to worry about whether my home appreciates in value. I just have to make sure my home is paid off by the time I retire.
Refinancing with retirement in mind
When I went to refinance my home earlier this year, I did it with my retirement in mind. If I had taken out the 30-year mortgage, I would have had the responsibility of paying a mortgage until I'm 70 years old. By choosing a 15-year mortgage, I can pay the minimum amount due and still own my home free and clear by the time I'm 55. I am also fortunate to have been able to land a 2.75 percent interest rate.
Making extra payments
I hope to be able to pay my home off even earlier in case I have to deal with an unexpected layoff or illness. By paying off my home in another 7 years, I'll have fewer worries. Since the odds of becoming ill increase as a person gets older, it makes sense to pay off the home now while we have the money.
Having more options
I want to have more cash flow when I'm retired so I have freedom to travel or help loved ones. I know some senior citizens who still have to make a monthly mortgage payment. I know other seniors who don't owe any money because they have a reverse mortgage on their homes. The downside to the reverse mortgage is that it forces many seniors to stay put in their home because they can't afford to move. I rather have options when I'm retired in case my neighborhood goes down hill.
Ignoring the stock market swings
By using my home as a forced savings account, I don't have to worry as much about what's happening with the stock market. I still invest for my retirement, but I don't need to have as much income since I'll only be paying taxes and property insurance when I'm older. It gives me financial peace of mind to know that I don't need to get a certain return on my stocks or receive a certain amount of dividends to cover my mortgage payment in retirement.
Because I hope to retire in place, I picked a home that could accommodate my needs as I grow older. I like being located to major shopping outlets. I also have a one-story home without any stairs to climb as I grow older. I am close to a major hospital as well as places for exercise and entertainment.
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