Here's part four of a USA Today article on 10 things you should ask yourself about retirement:
How much home equity do I have?
Equity is the difference between your home's value and the amount you owe on your mortgage.
As you approach retirement, equity is your ace in the hole, so treat it with care. If you stay in your home, it can provide an important source of funds for emergencies. And if you sell, you'll be able to use the proceeds to beef up your retirement savings.
Should I pay off my mortgage?
It's not a bad idea. If you pay off your mortgage while you're working, that's one less expense you'll have when you retire.
That doesn't mean you should drain your savings to pay off the mortgage. If you need money for emergencies, you could be forced to borrow against your home, at potentially higher interest rates. A better plan: Accelerate your mortgage payments. One popular strategy is to make the equivalent of 13 monthly payments a year instead of 12. You'll save thousands of dollars in interest.
My thoughts:
1. Like many personal finance articles, this one's starting to lose steam near the end.
2. If you own your home outright, one major concern of retirement (will you always have a place to live?) is settled. Personally, I paid my home off early (against the conventional wisdom/advice) and have been able to save a significant amount towards retirement since then.
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