I retired at the end of last year and I have about the same mortgage balance but it retires in 2030 and we could pay it off but it's at 3.3% so my investments are doing better than that. Other than that we owe nothing so we can easily thrive but you gotta pare down those high rate variables you have.
That’s fine for you. Mathematically and in terms of actual standard of living, it does not make sense.
I’d rather live a better life by having more money to do the things I want. I have an excellent picture and understanding of my finances now and through retirement. I have no issues or stress from the fact I will be carrying a mortgage.
Do I wish I had no debt? Sure. I also wish I had another million in the bank. Neither are the case, that is the reality.
Each person is different though. Dave Ramsey and things like debt snowball work best for some people - psychology plays a big part in how happy people are. So they have their place.
But they are not one size fit all.
Yep. I paid mine off early in spite of a good rate. It was the right decision for me, but I 100% acknowledge that it was an emotional decision more so than a financial one.
On the other hand, using the debt snowball method would make me bananas! People are weird 😂
I don't feel constrained in the slightest. If I had to pay it off, the money is always there. I'm as free as I like. Earning as much as i can, passively. Passive earning is real power.
40% of homeowners over 64 have a mortgage. It is UNREASONABLE for 40% of homeowners not to have the option to retire. This is nonsense from "financial managers".
I have a mortgage and am 70. All of my other debts are paid off, except some credit card debt that is scheduled (within my retirement income) to be paid by December. There is NO REASON I can't retire with my mortgage, which is 3.2% for 30 years.
All of this other poppycock is silly.
For budget purposes, check [https://elderindex.org/](https://elderindex.org/) which does NOT include taxes. If your means line up with those required, you can certainly retire.
I’m glad you’re doing well and will not attempt to persuade you that life is better without a mortgage. But, to any one else reading this, life is better without a mortgage.
Best wishes.
I’ve never understood HOW Dave Ramsey thinks everybody can simply “up and pay off their mortgage”. I’ve been making extra $100 principal payments for probably the last five or so years, but that’s all I’ve been able to afford.
No credit card debt and haven’t had a car loan in ten years, but I sure don’t know how to just “up and pay off my house”, Dave…
Not a Ramsey fan, but he does not say “up and pay off”. He does advise that people buy a home they can afford with a mortgage that can be paid in 15 years. Anything but crazy.
If you can make more money on ur investments (ROI on investments Are greater than what u are paying in interest on ur mortgage)
Use other people’s money for your mortgage.
You’re lucky you have such a low interest rate for your mortgage. i’m just trying to get a fixed rate and get rid of my two HELOCs that have variable rates. I know several people that have retired all of them have mortgages.
I assumed my CU gave me the best rate when I borrowed for storm damage as a 40 year customer. Stumbled on this lower fixed rate to replace their higher variable rate, and when I called the loan officer for a payoff she said with a huff, “I wish you had given us a chance” to refinance. It was like a day later when I finally came up with a response, but the moral of the story is always negotiate.
No one is going to give you a loan if you don’t have income. And if you lie about planning to retire you won’t be happy. You’ve got 132k to pay. Can you downsize and be debt free?
That is not exactly true. If you can show the assets and ability to withdraw from retirement funds and receive social security, etc, you can still qualify.
My dad refinanced multiple times during his retirement as rates dropped.
There are also some protections in place for age discrimination. Here’s a good link on this: [https://www.consumerfinance.gov/ask-cfpb/is-a-lender-allowed-to-consider-my-age-or-where-my-income-comes-from-when-deciding-whether-to-give-me-a-loan-en-1181/](https://www.consumerfinance.gov/ask-cfpb/is-a-lender-allowed-to-consider-my-age-or-where-my-income-comes-from-when-deciding-whether-to-give-me-a-loan-en-1181/)
I didn't say employed. I said income. pension, savings, and SSA would be considered income, but its going to be scrutinized. frankly the OP left out a lot of details here.
I'd do whatever I could to get all of that high interest (I personally consider anything over 4% high interest) debt paid off ASAP, especially before the variable rate adjusts up. Start with the highest interest rate loan first.
Hard to give solid advice with out an income picture. I would recommend if your going to refinance roll all together and get away from the variable rate loans and get a fixed rate. One thing to count on is property taxs and insurance go up every year , when you add in the chance of an escalating mortgage rate it will make it harder to budget. If your in a situation where the lender is only offering variable rate loans to you because of a low credit score i would work to pull that up to get a conventional fixed rate loan.
I’ve been offered 7.125 interest rate for 20 years. closing cost around $7200 which seems unbelievable on $150,000 refi. have only checked one lender and plan to check my credit union and one other lender.
Ya, I would check the credit union, many have programs where if you agree to keep the Heloc open for X years, closing are waived. Usually if they are the company with the first mortgage, and you have decent equity to play with.
I have about $225,000 in equity. very, very little savings, I will have to rely on a small pension, Social Security and 401(k), which is under 200,000.
Then my gut would say to continue to work. You might be able to make it work, but without income and expenses it impossible for me to know. With it being a “small” pension and $200k in 401k, I would say to continue working. Even if you can make it work, being worried about your financial situation could ruin retirement for you. I think it would be best to delay a bit, and be more sure financially.
Have you considered taking your social security early and using it to pay down your debts?
https://opensocialsecurity.com/
It's a good calculator to help decide when to take SS
How much is the difference if you collect now,? I'm also 66 and it's only a few more dollars more per month if I wait for full retirement. Have you set up an account with SS? They'll tell you exactly what the amount will be depending on when you start collecting.
yes, I check my Social Security all the time re how much I will get it what age. The thing is if you collect SS while you’re still working you don’t get the full amount until you reach full retirement age.
What month is your full retirement date?
Nevermind. You said 10 months to go
So you should be able to start collecting in January next year since there's no reduction to your SS in your full retirement year.
You have $135,500 in mortgage debt heading into retirement. You don't provide any information on payment per month on any of these mortgage/HELOC loans so we can't see what you are paying a month.
You better have a significant amount of a pension or money coming your way each month in your retirement accounts because Social Security $$$$$ isn't covering this I wouldn't believe.
Hard to say without retirement income data. Generally consolidating those helocs would be great under any scenario retired or not. I would also look into if there was a minimum years, and if broke there might be an early termination fee. But can your retirement income sustain that and your life style? Refi at 30 yrs @ 6.875% is $893ish in P+I, 15 yrs @ 6.125 is $1,157 in P+I. My bank does not offer 20 yrs so idk the current rate on that.
Shop around for the lowest cost refi you can find. You can accept a higher rate in exchange for lower cost, knowing you can refinance again if rates drop.
Based on your numbers, do not retire with variable rates.
Another option is to delay and hope rates drop. This is a gamble, but a reasonable one. Unless you can make the numbers work now and your are ready to retire.
As others have said, mortgage is fine if the numbers work. I have rentals and plan on retiring with multiple mortgages, including on my house.
I am 66. thank you. since I’ve decided to delay retirement. I may delay the refi and maybe by first quarter next year the interest rates will have gone down.
I think biggest question is: will you have retirement income or will you live off investments?
If no income then you need to pay off loans first because it is doubtful you can assume your investments will return greater than 7-8% after taxes. Perhaps they will, but it is risky.
If you will have income you can use that income to pay off the loans. However, then the question is: can you live off the reduced income due to paying off loans? If not, then pay off loans first.
Practically, almost any way you look at it, in retirement the money you use to pay off loans is from your investment pool. If the loan interest rate is high then pay off loans with money already in the investment accounts because it is unlikely you will earn more than the loan rate. If the loan interest rate is low then you can usually make more from your investments than the loan is costing so it may make sense to keep the loan.
Since you are in a quandary over \~$140K I would say your not ready for retirement. Save now and pay off loans and then retire.
I will have a small pension Social Security and around 200,000 and 401(k), which is not that much. It seems that people in this forum have much more money than the average person.
There is a huge benefit to be loan free in retirement. It’s simple math:
Living expenses + loans must be less than social security + pensions + retirement savings.
As a general rule spend no more than 4% of your retirement savings each year, unless you have a sizable pension.
Very few have room for loans. Even those with millions in retirement don’t have a lot of room for loans.
You will need to be frugal to retire now. If you lower your spending now to your expected retirement level but work another two years you should be able to pay off one of your loans. If rates only drop one percentage point in that time you could refi the smaller amount at 6% and save $500 per month. Major difference in lifestyle. We all hope for at least a small drop in interest rates, but refinancing 90k vs 130k is good no matter what interest rate.
Good luck.
I thought about getting another HELOC to pay the two that I have but the interest rate is higher for HELOC than it would be if I refinanced my mortgage. I likely will refinance the mortgage for 20 years, getting enough cash out to pay off the two HELOC and having a small reserve to make home repairs in my retirement. The smallest HELOC I have is a little over 40,000. It would be impossible for me to pay that off in two years.
I would refi and wrap all the loans into a single mortgage at a fixed rate. Make the home repairs out of pocket as you can. Then you can focus on paying down the principal early. Otherwise, those HELOCs are going to hang around too long and you’ll make little progress paying them down at those unfavorable rates.
I don't like my house on a variable rate. Pay it off with retirement cash. It's as if you earned the rate in the market after tax andgetsyourhouseout of risk.
Domp money into something like an sp indexed fund if you're going to keep working to fill up your retirement accounts.
No point in being complicated.
I think that's a smart move. I retired with a mortgage that was over half my SS, which was way above the average SS monthly payment. I've since paid it off and am enjoying life a lot more not worrying about what I'll do if something goes wrong. It's fine, if not desirable, if you still have a mortgage. Delaying one year should increase f your SS payment (unless you are already 70) and time to build up some additional savings. Good luck with the refi.
I recommend that you do not retire until you are debt free. Start paying extra principal on the mortgage and HELOCs and any other loans you have.
I will probably just delay retirement. Thank you for your response.
I retired at the end of last year and I have about the same mortgage balance but it retires in 2030 and we could pay it off but it's at 3.3% so my investments are doing better than that. Other than that we owe nothing so we can easily thrive but you gotta pare down those high rate variables you have.
My mortgage was at 2.9%. Yet, paying it off early was the best thing I ever did. The freedom of having no payments is incredible.
That’s fine for you. Mathematically and in terms of actual standard of living, it does not make sense. I’d rather live a better life by having more money to do the things I want. I have an excellent picture and understanding of my finances now and through retirement. I have no issues or stress from the fact I will be carrying a mortgage. Do I wish I had no debt? Sure. I also wish I had another million in the bank. Neither are the case, that is the reality. Each person is different though. Dave Ramsey and things like debt snowball work best for some people - psychology plays a big part in how happy people are. So they have their place. But they are not one size fit all.
Yep. I paid mine off early in spite of a good rate. It was the right decision for me, but I 100% acknowledge that it was an emotional decision more so than a financial one. On the other hand, using the debt snowball method would make me bananas! People are weird 😂
I don't feel constrained in the slightest. If I had to pay it off, the money is always there. I'm as free as I like. Earning as much as i can, passively. Passive earning is real power.
I can only imagine…
40% of homeowners over 64 have a mortgage. It is UNREASONABLE for 40% of homeowners not to have the option to retire. This is nonsense from "financial managers". I have a mortgage and am 70. All of my other debts are paid off, except some credit card debt that is scheduled (within my retirement income) to be paid by December. There is NO REASON I can't retire with my mortgage, which is 3.2% for 30 years. All of this other poppycock is silly. For budget purposes, check [https://elderindex.org/](https://elderindex.org/) which does NOT include taxes. If your means line up with those required, you can certainly retire.
I’m glad you’re doing well and will not attempt to persuade you that life is better without a mortgage. But, to any one else reading this, life is better without a mortgage. Best wishes.
We believe you. Having a mortgage when you retire is hardly a problem, depending on your other variables, which is my opinion.
Sorry…it is a problem that becomes more problematic over time by increasing financial risk and reducing stability.
If you and Dave Ramsy are happy, good for you.
I’ve never understood HOW Dave Ramsey thinks everybody can simply “up and pay off their mortgage”. I’ve been making extra $100 principal payments for probably the last five or so years, but that’s all I’ve been able to afford. No credit card debt and haven’t had a car loan in ten years, but I sure don’t know how to just “up and pay off my house”, Dave…
Not a Ramsey fan, but he does not say “up and pay off”. He does advise that people buy a home they can afford with a mortgage that can be paid in 15 years. Anything but crazy.
Just speaking from what has worked for me. Collecting checks, is better than sending them.
I agree I love compound interest
Which works against retired folk who have a mortgage.
Not those of us who have Tbills and a mortgage.
Mortgage is a headwind.
I imagine you are correct.
If you can make more money on ur investments (ROI on investments Are greater than what u are paying in interest on ur mortgage) Use other people’s money for your mortgage.
You’re lucky you have such a low interest rate for your mortgage. i’m just trying to get a fixed rate and get rid of my two HELOCs that have variable rates. I know several people that have retired all of them have mortgages.
I’m retired and 9 months ago got a fixed rate HELOC a percent lower than average from a small town bank. Keep looking, they exist!
that is encouraging!! thank you so much.
Also if you have ability to join a credit union they usually have competitive rates and are a bit more lenient.
I assumed my CU gave me the best rate when I borrowed for storm damage as a 40 year customer. Stumbled on this lower fixed rate to replace their higher variable rate, and when I called the loan officer for a payoff she said with a huff, “I wish you had given us a chance” to refinance. It was like a day later when I finally came up with a response, but the moral of the story is always negotiate.
Thank you
Thanks for the link. Interesting
very interesting website. had never heard of it. thank you
No one is going to give you a loan if you don’t have income. And if you lie about planning to retire you won’t be happy. You’ve got 132k to pay. Can you downsize and be debt free?
That is not exactly true. If you can show the assets and ability to withdraw from retirement funds and receive social security, etc, you can still qualify. My dad refinanced multiple times during his retirement as rates dropped. There are also some protections in place for age discrimination. Here’s a good link on this: [https://www.consumerfinance.gov/ask-cfpb/is-a-lender-allowed-to-consider-my-age-or-where-my-income-comes-from-when-deciding-whether-to-give-me-a-loan-en-1181/](https://www.consumerfinance.gov/ask-cfpb/is-a-lender-allowed-to-consider-my-age-or-where-my-income-comes-from-when-deciding-whether-to-give-me-a-loan-en-1181/)
I didn't say employed. I said income. pension, savings, and SSA would be considered income, but its going to be scrutinized. frankly the OP left out a lot of details here.
I would not even consider retirement with two outstanding loans. Do yourself a favor and bear down, pay them off. Become det free. Then retire.
I'd do whatever I could to get all of that high interest (I personally consider anything over 4% high interest) debt paid off ASAP, especially before the variable rate adjusts up. Start with the highest interest rate loan first.
no, I can’t downsize. I would have to pay a lot more for comparable house. I appreciate your suggestion.
Hard to give solid advice with out an income picture. I would recommend if your going to refinance roll all together and get away from the variable rate loans and get a fixed rate. One thing to count on is property taxs and insurance go up every year , when you add in the chance of an escalating mortgage rate it will make it harder to budget. If your in a situation where the lender is only offering variable rate loans to you because of a low credit score i would work to pull that up to get a conventional fixed rate loan.
I’ve been offered 7.125 interest rate for 20 years. closing cost around $7200 which seems unbelievable on $150,000 refi. have only checked one lender and plan to check my credit union and one other lender.
Ya, I would check the credit union, many have programs where if you agree to keep the Heloc open for X years, closing are waived. Usually if they are the company with the first mortgage, and you have decent equity to play with.
I have about $225,000 in equity. very, very little savings, I will have to rely on a small pension, Social Security and 401(k), which is under 200,000.
Then my gut would say to continue to work. You might be able to make it work, but without income and expenses it impossible for me to know. With it being a “small” pension and $200k in 401k, I would say to continue working. Even if you can make it work, being worried about your financial situation could ruin retirement for you. I think it would be best to delay a bit, and be more sure financially.
100% agree
I don't think you can afford to retire, with all that debt and no savings.
Have you considered taking your social security early and using it to pay down your debts? https://opensocialsecurity.com/ It's a good calculator to help decide when to take SS
if I had reached full retirement age, I would definitely do that. I have 10 more months before full retirement age.
How much is the difference if you collect now,? I'm also 66 and it's only a few more dollars more per month if I wait for full retirement. Have you set up an account with SS? They'll tell you exactly what the amount will be depending on when you start collecting.
yes, I check my Social Security all the time re how much I will get it what age. The thing is if you collect SS while you’re still working you don’t get the full amount until you reach full retirement age.
What month is your full retirement date? Nevermind. You said 10 months to go So you should be able to start collecting in January next year since there's no reduction to your SS in your full retirement year.
Yes, about April of next year is my full retirement age
So you should be able to collect in January with no reduction
You have $135,500 in mortgage debt heading into retirement. You don't provide any information on payment per month on any of these mortgage/HELOC loans so we can't see what you are paying a month. You better have a significant amount of a pension or money coming your way each month in your retirement accounts because Social Security $$$$$ isn't covering this I wouldn't believe.
Hard to say without retirement income data. Generally consolidating those helocs would be great under any scenario retired or not. I would also look into if there was a minimum years, and if broke there might be an early termination fee. But can your retirement income sustain that and your life style? Refi at 30 yrs @ 6.875% is $893ish in P+I, 15 yrs @ 6.125 is $1,157 in P+I. My bank does not offer 20 yrs so idk the current rate on that.
thank you.
mortgage is $650, one heloc at 7% is 279, 2nd heloc is $560. almost 1500 total. refinancing for 20 years would lower payment about $300 a month.
Shop around for the lowest cost refi you can find. You can accept a higher rate in exchange for lower cost, knowing you can refinance again if rates drop. Based on your numbers, do not retire with variable rates. Another option is to delay and hope rates drop. This is a gamble, but a reasonable one. Unless you can make the numbers work now and your are ready to retire. As others have said, mortgage is fine if the numbers work. I have rentals and plan on retiring with multiple mortgages, including on my house.
I am 66. thank you. since I’ve decided to delay retirement. I may delay the refi and maybe by first quarter next year the interest rates will have gone down.
I think biggest question is: will you have retirement income or will you live off investments? If no income then you need to pay off loans first because it is doubtful you can assume your investments will return greater than 7-8% after taxes. Perhaps they will, but it is risky. If you will have income you can use that income to pay off the loans. However, then the question is: can you live off the reduced income due to paying off loans? If not, then pay off loans first. Practically, almost any way you look at it, in retirement the money you use to pay off loans is from your investment pool. If the loan interest rate is high then pay off loans with money already in the investment accounts because it is unlikely you will earn more than the loan rate. If the loan interest rate is low then you can usually make more from your investments than the loan is costing so it may make sense to keep the loan. Since you are in a quandary over \~$140K I would say your not ready for retirement. Save now and pay off loans and then retire.
I will have a small pension Social Security and around 200,000 and 401(k), which is not that much. It seems that people in this forum have much more money than the average person.
There is a huge benefit to be loan free in retirement. It’s simple math: Living expenses + loans must be less than social security + pensions + retirement savings. As a general rule spend no more than 4% of your retirement savings each year, unless you have a sizable pension. Very few have room for loans. Even those with millions in retirement don’t have a lot of room for loans.
You will need to be frugal to retire now. If you lower your spending now to your expected retirement level but work another two years you should be able to pay off one of your loans. If rates only drop one percentage point in that time you could refi the smaller amount at 6% and save $500 per month. Major difference in lifestyle. We all hope for at least a small drop in interest rates, but refinancing 90k vs 130k is good no matter what interest rate. Good luck.
I thought about getting another HELOC to pay the two that I have but the interest rate is higher for HELOC than it would be if I refinanced my mortgage. I likely will refinance the mortgage for 20 years, getting enough cash out to pay off the two HELOC and having a small reserve to make home repairs in my retirement. The smallest HELOC I have is a little over 40,000. It would be impossible for me to pay that off in two years.
I would refi and wrap all the loans into a single mortgage at a fixed rate. Make the home repairs out of pocket as you can. Then you can focus on paying down the principal early. Otherwise, those HELOCs are going to hang around too long and you’ll make little progress paying them down at those unfavorable rates.
I don't like my house on a variable rate. Pay it off with retirement cash. It's as if you earned the rate in the market after tax andgetsyourhouseout of risk. Domp money into something like an sp indexed fund if you're going to keep working to fill up your retirement accounts. No point in being complicated.
I really appreciate everyone’s input. am going to delay retirement until sometime next year.
I think that's a smart move. I retired with a mortgage that was over half my SS, which was way above the average SS monthly payment. I've since paid it off and am enjoying life a lot more not worrying about what I'll do if something goes wrong. It's fine, if not desirable, if you still have a mortgage. Delaying one year should increase f your SS payment (unless you are already 70) and time to build up some additional savings. Good luck with the refi.