NEW YORK (6/11/13)--Not long ago, people gauged retirement readiness by their mortgage-free status. This stipulation no longer always holds true. In 1989, only 26.4% of householders retired while still carrying a mortgage. In 2007, that number rose to 46.5%, according to the most recent numbers from the Federal Reserve's Survey of Consumer Finances (businesstime.com May 28).
Paying off a mortgage has pros and cons, and the best decision isn't the same for everyone. If you won't have peace of mind until our mortgage is paid in full, paying it off might be the answer for you. Your living expenses will be cut and you'll have a resource in your home equity.
On the other hand, low interest rates can make continuing to pay a mortgage and investing surplus money elsewhere an attractive option for some. You might see a greater return following this route.
"Paying off a mortgage is advisable only if these four preconditions are met," said Steve Rick, the Credit Union National Association's senior economist. The pre-conditions are:
For more information about mortgages, read the Financial Fitness Challenge "Catch the Refi Wave" in the Home & Family Finance Resource Center.