Mortgage Options for Retirees

Storms, Phil
November 2001
Journal of Financial Planning;Nov2001, Vol. 14 Issue 11, p42
Academic Journal
The article focuses on the mortgage options for retirees in the United States. In recent years, many financial planners have decided that mortgage rates are sufficiently low to justify leaving it in place and investing the proceeds elsewhere. This is the best option for many retirees; however, for others, the advantages of a free-and-clear house are more important than the opportunity for investment gain. Simplicity is probably the most important benefit of an unencumbered home. Clients for whom a free-and-clear home at retirement is a compelling goal are well advised to develop a plan to repay their mortgage. Many clients choose 15-year loans or mortgage acceleration programs to provide them with the discipline to pay oft their mortgage early. Mortgage acceleration programs add fees for the privilege of paying off the mortgage early. When it comes to equity acceleration plans, it is best to remember that there is no one size fits all program. A financial planner skilled in the use of a financial calculator can custom-design a mortgage acceleration program for a client in 15 minutes. Clients approaching retirement with a mortgage intact have no cause for alarm.


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