Should You Pay Down the House or Keep Your Mortgage?

Lauren Smith |
When you retire, is it a better idea to pay off your mortgage or keep it?

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Today we’re going to answer one of the most common questions we receive here at Green Financial Group: Should I pay off the house or keep the mortgage when I retire? There’s no one-size-fits-all answer to that question. For some clients, the peace of mind knowing that they’re debt-free and their house is paid for means more to them than anything else.

"Pulling money from your IRA to pay down your mortgage is like killing the goose that lays the golden eggs."

There’s also the financial side to consider. Mortgage rates are at historic lows, so you can refinance your mortgage to get a lower rate, but if you’re currently paying at 2% or 3%, it might be a good idea to keep the mortgage and invest the funds in the market that you would have otherwise spent paying down the balance.

If you want to pay off the house, you’ll need to consider where you’re getting the funds. Are you going to pull it from your IRA? If so, you’ll have to pay an income tax on those IRA monies, and you’ll be draining that account, which we call ‘killing the goose that lays the golden eggs.’ You’ll also lose some tax write-off opportunities.

If you have any questions about paying off your mortgage or keeping it when you retire, feel free to reach out to us. We’d love to give you our professional guidance.

The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct.

Every investor's situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. The foregoing is not a recommendation to buy or sell any individual security or any combination of securities. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision.