Should You Pay Off Your Mortgage Before You Retire?

by Emily Brandon
Tuesday, June 24, 2008provided by

Financial planner Nancy Langdon Jones of Claremont, Calif., likes the idea of having her home paid off before she retires. Her husband, actor Claude Earl Jones, would rather have the money invested than tied up in the house. “For my husband, it was very important that he could look at his brokerage statement and see that the money was there,” she says. “I wanted to know that if something came up we wouldn’t have to worry about the house payments.”

After sitting down with a financial planner to get a neutral, third-party view, the Joneses found their compromise: downsizing to a smaller house (with a more manageable mortgage payment) while keeping most of their savings in their brokerage account.

Their struggle illustrates a divide in the financial planning industry. Should you own your home free and clear before you retire? Or is it better to keep your mortgage and invest the money elsewhere at perhaps a higher return while reaping the mortgage-interest tax break? Here are factors to weigh when deciding which path is right for you.

Compare interest rates. The typical 30-year, fixed-rate mortgage interest rate is currently 6.57 percent, according to the Mortgage Bankers Association. If you are getting a higher average rate of return on your investments elsewhere than your interest rate, it makes sense to keep your mortgage. Just over half of affluent baby boomers born in 1948 who have both mortgages and investable assets of at least $1 million do not plan to pay off their mortgages until their 70s, if ever, according to a recent survey of 500 people by investment management firm Bell Investment Advisors.

“Mortgages help free up funds that otherwise would be tied up in property ownership for investment in equities,” says Jim Bell, the firm’s founder and president. Investing in the stock market money that would otherwise be tied up in home equity also gives you the option of raising cash to deal with unexpected expenses like medical bills or even rising gas prices.

Pay it down. If you’re not sure whether you can achieve a higher return in the stock market or aren’t willing to take the risk, then you should prepay your mortgage principal as you approach retirement. “We don’t know what the earnings are going to be in the market,” says Vern Hayden, a certified financial planner and president of Hayden Financial Group in Westport, Conn. “The guaranteed return on your money is the interest you were paying” on the mortgage.

Refinancing from a variable-rate loan to a fixed-rate mortgage can give you a better idea of what your payments will be in retirement. Brent Neiser, a certified financial planner and a director of the National Endowment for Financial Education, recommends paying down principal above your monthly payments when you can. “Adding money at your discretion gives you the ability to stop that when times are tighter,” he says. On a $150,000, 30-year mortgage at 6 percent interest, paying just $100 extra per month would save you $45,000 and allow you to pay off the debt seven years sooner than following the normal payment schedule.

Don’t rob your retirement plan. According to the most recent Federal Reserve Survey of Consumer Finances, 32 percent of households headed by someone age 65 to 74 were carrying home-mortgage debt in 2004. It can be tempting to dip into your 401(k) or IRA to pay it off. But mortgages shouldn’t be paid off in the absence of other savings. “You need to have a balanced approach of keeping that retirement savings robust and also have regular savings for emergencies so you don’t turn to the credit cards if your refrigerator or furnace breaks down,” Neiser says. Also, pay off higher-interest debt like credit cards and car loans before your mortgage. “If you have your money tied up in a paid-off mortgage, in order to access that equity which is in your house, you have to go pay the bank to get your money [by refinancing the loan],” says Elisabeth Plax, a Beachwood, Ohio, financial planner and wealth manager for Plax & Associates Financial Services. “If you invest it, all you have to do is liquidate it” by selling.

Consider tax breaks. The interest you pay on your home mortgage is tax deductible on up to $1 million in debt. You can also typically write off interest on up to $100,000 of home-equity debt. But you benefit from this tax perk only if all your itemized tax deductions, including your mortgage interest, add up to more than the standard deduction that almost everyone gets automatically. For 2008, the standard deduction amounts are $5,450 for singles, $10,900 for couples, and $8,000 for heads of households.

Jonathan Pond, a financial planner and author of Grow Your Money! 101 Easy Tips to Plan, Save, and Invest, argues that you need to be in the 35 percent tax bracket, or make at least $350,000 annually, for the tax break to be worthwhile. Most Americans in the 25 percent tax bracket might pay, say, $10,000 in mortgage interest but save only $2,500 in taxes.

Look at the emotional aspect. Some 16 percent of workers and 10 percent of retirees think making mortgage payments or paying for a house is the most pressing financial issue facing Americans today, according to an Employee Benefit Research Institute survey done this year. But knowing that you own your home can give you a sense of stability in retirement–security that the possibility of stock market gains will never be able to. “Paying off the mortgage is going to reduce their need for cash flow when they go into retirement,” Hayden says. “I just think people ought to get out of debt because times are so uncertain, and the less they are shackled, the better they are going to be able to deal with whatever their problems are going to be.”

Copyrighted, U.S.News & World Report, L.P. All rights reserved.

A Florida Reverse Mortgage allows older homeowner’s (62+) to convert home equity into cash through monthly income, a line of credit or cash. The Florida reverse mortgage is different from conventional home equity loans: No income or credit qualifications, no monthly or immediate repayment due. The Florida reverse mortgage is repaid when the home is no longer the primary residence of the borrower (s).

There are several types of Reverse Mortgages:

• FHA insured HECM, sponsored by a branch of the U.S. Department of Housing and Urban Development (HUD)
• Fannie Mae Home Keeper, sponsored by Fannie Mae
• Proprietary programs by private banks

FL Reverse Mortgage Property Qualifications

Single family up to four units…

The borrower has to reside in one unit as their primary residence but can rent the other unit (s).

Condos…
The condominium needs to be HUD approved or receive HUD spot approval. This can be done with a spot condominium affidavit completed by the homeowners association (provided by the lender). Special assessments and on-going litigation are not acceptable. HOA reserve must be sufficient. Planned Unit Developments (PUD).

Manufactured Homes…
Manufactured Homes maybe acceptable under certain conditions.

How do I the borrower get paid?

Monthly Payments…
As a tenure plan: receive a check for as long as one lives in their home.

As a term payment: receive a check for a certain period, i.e. 10 years or 15 years (only available on the HECM).

Line of Credit…
With the FHA HECM loan, the balance in the credit line could grow at .5% higher than the current interest rate being accrued. This could result in more money available for the borrower at future dates (There is no growth rate with the Fannie Mae Home Keeper loan).

Lump Sum or a Combination of the above…
With either the FHA or Fannie Mae loans, the payment plan may be changed during the term of the loan. A small one-time fee will be charged to the loan balance at the time of each change.

Florida Reverse Mortgage: FAQ

I just had sex just had sex

Call us at 1-866-938-0550 and we will  be happy to go over all your options for a Florida FHA Mortgage.
Below are some of the features of a Florida FHA Mortgage:

Florida FHA Mortgage

• •97% Financing
• •100% using grant programs
• •Manual Underwriting
• •Compensating Factors
• •530 credit scores
• •No soft market conditions
• •Financed Mortgage Insurance
• •low rate adjustments for credit or debt ratio
• •Low rates fixed & adjustable
• •6% seller concession

We will be happy to provide you with a Good Faith Estimate with all the fees that maybe associated with your Florida FHA Mortgage including all taxes and Title Insurance.

Click Here to Apply Florida Mortgage Application (Refinance)

Click Here to Apply Florida Mortgage Application (Home Purchase)

FHA Florida Mortgage

Call us at 1-866-938-0550 and we will  be happy to go over all your options for a fha loan in Florida.

Below are some of the features of a fha loan in Florida:

 FHA Loans Florida

• •97% Financing
• •100% using grant programs
• •Manual Underwriting
• •Compensating Factors
• •530 credit scores
• •No soft market conditions
• •Financed Mortgage Insurance
• •low rate adjustments for credit or debt ratio
• •Low rates fixed & adjustable
• •6% seller concession

We will be happy to provide you with a Good Faith Estimate with all the fees that maybe associated with your Fha Loan in Florida including all taxes and Title Insurance.

Click Here to Apply Florida Mortgage Application (Refinance)

Click Here to Apply Florida Mortgage Application (Home Purchase)

fha loans Florida

When the real estate market comes back, it will not be with a sonic boom. It is likely to be subtle, below the public’s radar. The revival will probably begin in the areas hit hardest by the bust: in Florida, Las Vegas, and the honeycombed tracts that flank the broad freeways east of Los Angeles known as the Inland Empire. (Indeed, home sales in Southern California surged 22% from March to April, hitting their highest levels since August.) Why will housing come back? For a reason as solid as floor joists: The entry-level buyer, for the first time in years, is finding that owning a new house is suddenly just as cheap as renting. “Those first-time buyers got locked out by high prices,” says John Karevoll of DataQuick, a research firm that assembles data on the U.S. real estate market. “Now the buying activity that was on hold is starting to come back.”

Two new, smaller homes from KB Home.

In hindsight, the reason for the current malaise is simple: too few buyers. By 2007 more and more people were frozen out of the market - especially the entry-level buyers, who now account for as much as 30% of new-home sales. They’re the twentysomething young professionals who rent until they get married or the first child arrives, and then reach for the American dream of homeownership. From 2005 to 2006 some first-timers rushed to purchase homes they couldn’t afford with the help of exotic loans. But another big group of young consumers steered clear and are finally looking to buy. Now that prices of new houses have fallen as much as 30% in areas including the Inland Empire and the outskirts of Phoenix, they are returning- prompting a turning point in the housing cycle. Call it the New Affordability.

Three factors are driving the New Affordability: housing prices, house size, and the government’s expanding role in the mortgage market. The experience of Richard Murkey, 28, and his wife, Kayla, 25, epitomizes the trend. The Las Vegas residents started shopping in 2006 but couldn’t remotely afford the $300,000-plus prices that modest houses were fetching at the height of the frenzy. “Then, in the middle of 2007, we saw prices dropping, so we started looking again,” says Richard, who sells safety products to construction sites. In January the Murkeys went to contract on a four-bedroom, Tuscan-style house at $246,000, more than $50,000 less than that KB model sold for 18 months before. It gets better. KB Home offered a program called “price protection” that guarantees that if the price of your model falls before the closing, KB will lower your price to match it. Result: The Murkeys got a discount that dropped the price from $246,000 to $213,000.

Nor was financing a problem. The Murkeys obtained an FHA-insured loan at under 6%, with a down payment of just 3%. Their mortgage, taxes, and insurance total $1,400 a month, a mere $200 more than the rent they were paying on their three-bedroom apartment. The FHA’s role is something that housing bears have mostly overlooked: The FHA, Fannie Mae, and Freddie Mac are now guaranteeing more than 90% of loans to first-time homebuyers. The FHA is providing lending that the private market has stopped making to borrowers with blemishes on their credit records. Both the rates and down payments are extremely low.

Today seven in ten KB customers are getting financing from the FHA. The current rates are below 6%, more than 100 basis points under those on jumbo mortgages not backed by the FHA or Fannie Mae or Freddie Mac. (Fannie and Freddie lend less readily to people with past credit problems and hence aren’t as crucial to the entry-level market as FHA financing.) Congress has raised the FHA limit to $729,750 in high-cost areas like Los Angeles through the end of 2008. But even if the limits aren’t extended, virtually all the houses KB sells are priced for an FHA loan.

The houses themselves are being radically downsized to meet buyers’ budgets. At the peak of the last boom, in 2006, KB’s customers craved cathedral ceilings, formal dining and living rooms, and fancy wrought-iron railings on windows and balconies. Today’s buyers, KB found, are willing to trade size and amenities for far lower prices. But they’re extremely specific about what they want to keep. Buyers welcome houses half as big as the models that reigned at the peak, as long as they offer plenty of bedrooms. They also don’t miss the formal living and dining rooms if KB provides a “great room” combining the two in one open space that includes a generous-sized kitchen.

Bargain-hunters are drawn to these small houses, which look just like the behemoths built in 2005 and 2006. In Beaumont, a community of tract homes 70 miles east of Los Angeles, the Seneca Springs community is dotted with 4,000-square-foot, seven-bedroom Mediterranean homes that KB built at the peak. But right next to them the company is erecting new houses with exactly the same 50-foot façades- and a big difference you don’t notice from the street: They’re about half as deep and roughly 2,000 square feet. Those homes preserve the community’s curb appeal by keeping the façades looking similar and sumptuous. But purchasers love that the new homes boast five bedrooms, and they especially appreciate the pricetag: about $220,000, vs. $420,000 for the big neighboring homes built at the peak (and that now sell for around $300,000). Over time this New Affordability may swell the ranks of buyers. “What’s been killing the market is people who are waiting to buy or incapable of getting financing,” says Jonathan Dienhart of Hanley Wood Market Intelligence, a residential real estate research firm.

During the bubble KB lost its way. Building big, pricey homes wasn’t a mistake- that’s what the public wanted. The real problem was that management misread the future: It bought the illusion that the frenzy would last, and gorged on overpriced land. Management’s grandiose thinking also pushed KB into splashy new businesses far from its traditions. KB began in 1957, when Broad, then 23, recognized that he could lure legions of first-time buyers from their Detroit garden apartments if he could build houses more cheaply than his competitors. His rivals were erecting classic houses with basements. Broad saw basements as an anachronism: Homeowners no longer needed cellars for storing coal. So his new company, Kaufman & Broad, erected houses on a concrete slab and used part of the savings to offer his suburban commuters a popular new feature, the carport. Broad’s $13,700, three-bedroom starter homes carried the same monthly cost as a two-bedroom rental. “It was all about affordability,” says Broad, “just like it is again today.” By the early 1960s Broad had moved Kaufman & Broad to California and expanded into the thriving Sunbelt markets that, along with the Golden State, are still KB’s main turf, chiefly Arizona, Nevada, North Carolina, and Florida. Then as now, KB built not only starter homes but also their cousins, inexpensive houses for customers moving up.

Florida First Time Home Buyer Program

First time home buyer 

Thinking of buying a home for the first time? Well you should be, though housing prices have proved to go up and down overall they are probably still the best and #1 way to build wealth…They say at any given time of purchase that real estate prices will double over the course of 10 years. Quick math will tell you that if you spent $250,000 on a home you will make an additional $25,000 per year just by paying your monthly mortgage payment which in some cases is about what you would be paying for rent. Below is a step by step guide in purchasing a home for the first time and don’t be afraid to let the professionals work for you, that’s what there here for. Just be sure to research who you are dealing with because like anything else you may run into the wrong person who doesn’t have your best interest at heart. Real estate and mortgage professionals can make plenty of money on a transaction with out having to take advantage of a buyer/borrower so get to know who you are dealing with.

 The First Step:

Click Here to Get Pre-Approved Florida Mortgage Pre-Approval

It is important to get pre-approved to know exactly how much your income will allow you to spend. In today’s day and age most home purchase loans will be written through the FHA which is all full Doc loans. The advantage of using the FHA for your new home loan is because you will be able to get up to 97% financing and with a down payment assist program get your down payment paid for and in some cases your closing costs too.

Once you are pre-approved for up to a certain dollar amount now it is time to find a Realtor or a participating seller on your own.

 The Next Step:

Finding the right seller is important, be clear when you are working with a realtor to let them know you are using a down payment assist program that will need some seller participation to help get the deal closed (down payment assist programs often require the seller to contribute the money for you through a down payment program like Ameridream). So be sure to structure that in your offer so that the sellers know up front, that he will need to help you if he wants to sell. We are in a market now that sellers are eager to sell so trust me they will help if they can.

 Last:

Bring that contract back to the mortgage person that we recommended and they will finish the process for you…Which are finalize your loan and apply for your down payment assist for your new or First time home purchase.

If you need more help, I will be happy to help you with the process and depending on your area I may have inventory to sell.

Please call me directly at 561-350-0617 Anthony Crupi

Happy house hunting and be sure to find the very best deal…

Company’s that can Help You….

Nationwide Title Company

FHA First time home buyer

Nationwide Mortgage Company

Right now people are struggling making the monthly obligations due to the raise in interest rates, homeowners insurance and property taxes…We are here to help by offering you a free no obligation analysis of your current mortgage. We have found that  of people do not even  what they really have available to them because the banks and the FHA are rolling out new programs to prevent foreclosure pretty much daily at this point and because we are working with them on a daily basis so we can bring those new products to you.

Trust us when we tell you there is not a bank out there that wants your house and nor does the government so know that policy makers are doing there best to help you with a Florida Refinance Mortgage.

When thinking of a Florida Refinance Mortgage you want to weigh out all your options and find the best product that works for you. At Young & Associates we work with the government for all your FHA, VA and reverse mortgage options. Then work with all major banking institutions for all your prime rate borrowing so if you are interested in in refinancing a residential or commercial piece of real estate we are here to help!

A Mortgage refinance on your Florida home can very well be the answer to solving your short term financial problems but finding the right mortgage product with the best rate available to you and your credit can solve your financial problems for a long time. Having a fixed rate mortgage for your refinance will allow you to budget for a long period of time by knowing your rate will not adjust into a ARM mortgage that will eventually stat adjusting yearly and sometimes monthly. Trust us when we tell you you can not count on property values to increase yearly to save you…

Property values increase over long periods of time and history has proven  that they go up in spurts so there is no telling when that will happen.

We are here to help so give us a call we will be happy to offer you a free analysis of your current mortgage and property to let you know where you stand today…1-866-938-0550

Florida refinance Mortgage

First Time Home Buyer Program

First time home buyer 

Thinking of buying a home for the first time? Well you should be, though housing prices have proved to go up and down overall they are probably still the best and #1 way to build wealth…They say at any given time of purchase that real estate prices will double over the course of 10 years. Quick math will tell you that if you spent $250,000 on a home you will make an additional $25,000 per year just by paying your monthly mortgage payment which in some cases is about what you would be paying for rent. Below is a step by step guide in purchasing a home for the first time and don’t be afraid to let the professionals work for you, that’s what there here for. Just be sure to research who you are dealing with because like anything else you may run into the wrong person who doesn’t have your best interest at heart. Real estate and mortgage professionals can make plenty of money on a transaction with out having to take advantage of a buyer/borrower so get to know who you are dealing with.

 The First Step:

Click Here to Get Pre-Approved Florida Mortgage Pre-Approval

It is important to get pre-approved to know exactly how much your income will allow you to spend. In today’s day and age most home purchase loans will be written through the FHA which is all full Doc loans. The advantage of using the FHA for your new home loan is because you will be able to get up to 97% financing and with a down payment assist program get your down payment paid for and in some cases your closing costs too.

Once you are pre-approved for up to a certain dollar amount now it is time to find a Realtor or a participating seller on your own.

 The Next Step:

Finding the right seller is important, be clear when you are working with a realtor to let them know you are using a down payment assist program that will need some seller participation to help get the deal closed (down payment assist programs often require the seller to contribute the money for you through a down payment program like Ameridream). So be sure to structure that in your offer so that the sellers know up front, that he will need to help you if he wants to sell. We are in a market now that sellers are eager to sell so trust me they will help if they can.

 Last:

Bring that contract back to the mortgage person that we recommended and they will finish the process for you…Which are finalize your loan and apply for your down payment assist for your new or First time home purchase.

If you need more help, I will be happy to help you with the process and depending on your area I may have inventory to sell.

Please call me directly at 561-350-0617 Anthony Crupi

Happy house hunting and be sure to find the very best deal…

Company’s that can Help You….

Nationwide Title Company

FHA First time home buyer

Nationwide Mortgage Company

Click Here For a Refinance in Baltimore call us directly at 1-866-938-0550 to speak to someone now…

As a Baltimore refinance company we can provide you with FHA (government loan), VA ( Veteran Loan) , Conventional Prime Mortgages (best rate), Alt-A Home Loan Mortgage Products (ok rate) and Sub-Prime (not as good rate) Mortgage loans.

If your just thinking of a Baltimore refinance for your home and possibly just shopping around for the best rate we will be happy to provide with a Good Faith Estimate. There is NO OBLIGATION for this so feel free to contact us and we will be happy to give you a quote for your Baltimore refinance with the best rate available.

All of our Baltimore refinance Loan Officers have been extensively trained on the different Baltimore Refinance mortgage products available in today’s market so that when we are working with our clients we can explain too them all the Baltimore refinance loan options available to them based on there credit, income, assets and current market value of their home.

Call us Today and let us tell you what we know about refinancing in Baltimore!

Call 1-866-938-0550

Baltimore refinance

Click Here For a home mortgage in Baltimore or call us directly at 1-866-938-0550 to speak to someone now…

As a Baltimore home mortgage company we can provide you with FHA (government loan), VA ( Veteran Loan) , Conventional Prime Mortgages (best rate), Alt-A Home Loan Mortgage Products (ok rate) and Sub-Prime (not so great rate) Mortgage loans.

If your just thinking of a Baltimore home mortgage for your home and possibly just shopping around for the best rate we will be happy to provide with a Good Faith Estimate. There is NO OBLIGATION for this so feel free to contact us and we will be happy to give you a quote for your Baltimore home mortgage with the best rate available.

All of our Baltimore home mortgage Loan Officers have been trained extensively on the different Baltimore home Mortgage products available in today’s market so that when we are working with our clients we can explain too them all the Baltimore mortgage home loan options available to them based on there credit, income, assets and current market value of their home.

Call us Today and let us tell you what we know about Baltimore home mortgages

Call 1-866-938-0550

Baltimore Home Mortgages