By Janet Colliton
Planning Ahead
In a recent edition of Kiplinger online, at www.kiplinger.com , Jan. 4, 2012, Senior Editor Michael DeSenne described “6 Ways to Retire Without a Mortgage.”
Depending on the circumstances, most of these ideas are valid. Some of them, as the author notes, require a longer time frame to plan. You might not be able to begin all at age 60 or 65, for instance, but others can be applied closer to retirement age.
There are even more ideas not mentioned in the article that our office has worked on with clients but here, beginning with the Kiplinger list, are some ideas for approaching a debt-free retirement.
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Make extra mortgage payments.
Adding an extra $100 or a few hundred dollars to your mortgage payments every month can decrease your overall obligation substantially and can pay off the loan years earlier. Some lenders even have an online amortization calculator allowing you to compute how much sooner the mortgage would be satisfied and how much would be saved.
Refinance your mortgage and reduce the term.
As the author notes, to pay off your mortgage early using refinancing, you will need a shorter term loan. This works best if you refinance earlier in the current loan. The example given by DeSenne is 25 years left on a 30-year mortgage at 6 percent with a balance of $175,000. If you refinance with a 15-year mortgage, 10 years less than would remain on the original loan, at 4 percent and pay only $167 additional per month and one-time closing costs, you would save $105,000 in interest and have your mortgage paid off 10 years earlier.
Downsizing your home.
Obviously, selling your larger and more costly home
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