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I’m 60 and still owe 0,000 on my house. Should I be worried?
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I’m 60 and still owe $200,000 on my house. Should I be worried?

At 60, you still have hopes and dreams, and even though you’ve lived six decades, part of you still feels like a child. That’s why it’s sometimes strange to plan for retirement. It’s hard to balance feeling young inside and planning for your golden years. However, planning is essential.

If you’re nervous about having a mortgage at age 60 and wondering what it means for retirement, you’ve come to the right place. Here, we’ll discuss your options and help you determine if you’re doing better than you think.

Conventional wisdom versus reality

At one time, the conventional wisdom was that a person had to pay off their mortgage before retiring – and it made sense. After all, the lower a person’s bills, the more their retirement income can increase.

Although many retirees have paid off their mortgages, many have not. According to the Joint Center for Housing Studies at Harvard University, 41% of homeowners over 65 were still paying a mortgage in 2022. Additionally, 31% of homeowners 80 and over continued to have a mortgage.

For some homeowners, having a mortgage is not a problem and fits perfectly into their monthly budget. However, a recent study published by the Michigan Retirement and Disability Research Center at the University of Michigan found that the typical retiree who continues to pay a mortgage is strapped for cash.

Determining whether paying off a mortgage will be “no big deal” in retirement can help you plan your next move.

Are you 60 years old and worried that you have not saved or invested enough? There’s always time to increase your retirement income. These commission-free IRAs can help you get started.

Your specific situation

Whether or not you should be concerned depends on the specifics of your situation. Asking yourself the following questions can help you understand everything:

What does my budget look like after retirement?

Now is a good time to create a budget based on your expected sources of income, including Social Security, pensions, annuities, and retirement account withdrawals. Next, add up all your post-retirement expenses, including mortgage, utilities, groceries, transportation, health care and any other bills you pay. Do you think you’ll have enough money to cover your monthly obligations, or is there a big enough gap to fill?

How is my interest rate?

If you’re currently paying a high interest rate, it’s time to decide whether you’ll try to pay off the remaining $200,000 or refinance the mortgage (more on refinancing in a moment).

Can the remaining balance be refunded?

Imagine you borrowed $320,000 at an interest rate of 7% 15 years ago. You took out a 30-year mortgage and your monthly principal and interest payment is $2,129. That leaves you with 15 more years of mortgage payments. If you pay $1,000 more per month toward principal, your mortgage will be paid off in 6.75 years, just shy of your full retirement age.

Do I even want to pay the balance?

There are a few circumstances in which you should focus on other financial matters before tackling your mortgage. For example, if you have high-interest debt (like credit cards), the best thing to do is to pay it off before doing anything else. If your investments regularly earn a higher interest rate than you pay on your mortgage, it may make sense to keep your mortgage and continue investing.

If you’re asking yourself these questions but aren’t satisfied with the answers, it’s time to move on to a new plan.

Reimagine your life

If you already know that your housing payment will be a strain on your budget, imagine what your life would be like if you sold your current home and bought something smaller. “Smaller” doesn’t mean less pretty. You might fall in love with a low-maintenance home, a cool old loft, or a small house in the country.

Given how quickly home values ​​have climbed, you probably have a nice amount of equity. However, home values ​​have increased across the board, and you may find yourself paying more for a smaller home than you did for your original home. If so, you have at least three options:

1. I hope the real estate market recovers

Wait until home prices drop and you’ll be in a better position to pay less for a smaller home. The goal is to reduce your monthly budget.

2. Monitor mortgage rates

Keep an eye on mortgage rates and when they drop enough, refinance your home with another 30-year mortgage. Let’s say your current principal and interest payment is $2,129 and the rates drop to 4.5%. Refinancing your loan for another 30 years means your monthly principal and interest payment drops to $1,013, saving you $1,116 per month.

Refinancing a mortgage can seem intimidating, but it’s quite simple. If you decide to go this route, check out some of our preferred mortgage lenders for refinancing.

3. Consider a reverse mortgage

A reverse mortgage is an agreement in which the lender pays you a specific amount each month rather than paying the lender. You retain ownership of the home, but the money received from the lender must be repaid when you die, sell the home, or move permanently. If you decide to consider a reverse mortgage, do so with caution. The reverse mortgage industry has mixed reviews due to lenders charging exorbitant fees and otherwise seeking to separate homeowners from their equity.

Conclusion : Whether owing money on a mortgage is a problem depends on how much you’ll earn during your retirement years and how much you’ll pay. Fortunately, at age 60, you still have plenty of room to make the necessary changes.