Denver Real Estate and Mortgage Payoff/Reverse Mortgage
I have recently become more educated about the “reverse mortgage” and how it works in the Denver Real Estate market. You may not be free and clear yet, but if you have over 50% equity and are 62 or older it can enhance your cash flow dramatically. As your age goes up so does the amount you can borrow. For instance at 62 it is 50 %. At 72 it is 60%. Finally if you or your estate want to sell the property you can at any time. A reverse mortgage can also be used as a purchase loan!
However, becoming debt free is as much a part of the American Dream as owning a home but there certainly can be conflicting circumstances that make the decision to pay off your mortgage early unclear.
The advantages of paying off debt early is increased cash flow, less interest paid and a higher credit score. The disadvantages are lower cash flow available as discretionary funds for meals, entertainment and other things. If the ultimate goal is financial security, is it worth the intermediate sacrifice?
Whether you pay off your mortgage early is a personal decision that may be right for one person and not for another. Consider the following before you get started:
Reasons you should
- Peace of mind knowing that you don’t have a mortgage
- You’ll save interest regardless of how low your mortgage rate is
- Lowering your housing costs before you retire
Reasons you shouldn’t
- You can invest at a higher rate than your mortgage
- You have other debt at a higher rate than your mortgage that needs to be paid off
- You might need the money in the future and want to remain liquid
- You might not qualify for a mortgage currently
- You should pay off other debt with higher interest rates
- Your employer has a matching retirement plan that would benefit you more
- You have more urgent financial needs like emergency fund, life, health and disability insurance
- You expect high inflation and the value of your mortgage debt will decrease
Use this Mortgage Accelerator to determine how quick you can pay off your mortgage.
If you are in the first years of a mortgage, you might also want to see a program called “Honey I Shrunk The Mortgage”. Send me a email asking for the power point presentation.