Deciding whether to pay off your mortgage before retiring is a personal financial decision that depends on several factors. Here are a few key considerations to help you make an informed choice:
Interest Rate: Assess the interest rate on your mortgage. If the interest rate is relatively low, it may be financially advantageous to invest your money elsewhere, such as in retirement accounts or other investment opportunities, where you can potentially earn a higher return.
Retirement Savings: Prioritize your retirement savings. It’s crucial to ensure you have enough funds set aside for your retirement years. If paying off your mortgage would deplete a significant portion of your retirement savings, it might be wiser to continue making regular mortgage payments while focusing on building your retirement nest egg.
Monthly Cash Flow: Evaluate your monthly cash flow and budget. If you’re comfortable with your current mortgage payments and they fit well within your budget, you may choose to maintain the mortgage while using your available funds for other purposes, such as diversifying your investments or covering other expenses.
Tax Implications: Evaluate the tax implications of paying off your mortgage early. In some cases, the interest paid on a mortgage is tax-deductible, which can provide a financial benefit. Consult with a tax advisor to understand how paying off your mortgage might impact your tax situation.
It’s important to carefully evaluate your personal financial situation and priorities before making a decision. You may also want to consult with a financial advisor who can provide personalized guidance based on your specific circumstances.
A home equity loan, also known as a second mortgage, is a type of loan that allows homeowners to borrow money by using their home’s equity as collateral. Home equity refers to the portion of the property’s value that the homeowner owns outright, which is the difference between the property’s market value and any outstanding mortgage debt.
Here’s how a home equity loan typically works:
Determining the available equity: The first step is to assess the amount of equity you have in your home. This is done by subtracting any outstanding mortgage balance from the current market value of your property. For example, if your home is worth $400,000 and you still owe $200,000 on your mortgage, your available equity would be $200,000.
Loan application: Once you have an idea of the available equity, you can apply for a home equity loan with a lender of your choice. The lender will evaluate your credit history, income, and the value of your home to determine if you qualify for the loan.
Loan approval and terms: If your loan application is approved, the lender will specify the loan amount, interest rate, repayment period, and any other terms and conditions. Home equity loans typically have fixed interest rates and are repaid over a set period, usually 5 to 30 years.
Disbursement of funds: Once you accept the loan offer, the lender will disburse the funds to you either as a lump sum or in multiple installments, depending on the terms of the loan. You can then use the money for various purposes, such as home improvements, debt consolidation, education expenses, or other financial needs.
Repayment: After receiving the funds, you’ll need to make regular monthly payments to repay the loan. These payments typically include both principal and interest and are spread out over the agreed-upon repayment period. It’s important to make timely payments to avoid late fees and potential default on the loan.
Consequences of default: Since your home is used as collateral for the loan, failure to repay the home equity loan can result in foreclosure, where the lender can take ownership of your property to recover the outstanding debt. It’s crucial to carefully consider your ability to repay the loan before borrowing against your home’s equity.
Interest and tax benefits: Home equity loans often come with tax advantages, as the interest paid on the loan may be tax-deductible in certain situations. However, tax laws can vary, so it’s advisable to consult with a tax professional for specific advice regarding your situation.
Remember, home equity loans involve financial risk, and it’s important to understand the terms, repayment obligations, and potential consequences before proceeding. Consider consulting with a financial advisor or mortgage specialist to assess whether a home equity loan is the right option for your needs.
For those beginning the process of home buying, there are many factors to consider. Keep these ideas in mind as you conduct your search – whether it’s online or at a series of open houses.
Consider future needs Because life is always evolving, it’s important to move into a home that has enough space for your family’s anticipated changes. While features and space are always prime considerations, don’t forget to, look into the area schools, day care options, parks and other kid-friendly amenities if you plan to grow your family in your next home.
Look for flexible spaces Seek homes that offer rooms with multiple functions. For example, an office area may be suitable for a small child’s room, or a sunroom may be converted to a laundry area down the road. Unfinished basements are also blank canvases that can be customized to meet your family’s wants and needs.
Get to know the area The purchase of a home goes well beyond the property line. Be sure to examine the neighborhood in which the house is situated. From the condition of the neighbors’ houses to highway access and the proximity of necessities like grocery stores and gas stations, be sure to take every factor into account to help ensure you’re selecting the right location.
Home upgrades happen for different reasons but enhancing your home’s curb appeal and value are often at the top of the list. These projects can make it easier to enjoy your home knowing they carry a return on investment of up to 92%, according to the Remodeling 2021 Cost vs. Value Report published in “Remodeling Magazine.” Plus, you’ll have the added benefit of knowing you’re making a sound investment should you decide to sell down the road.
Stone veneer is an upgrade that adds warmth and texture with the look of natural stone, but without the expense. It’s also a durable product that is low maintenance, so you don’t have to worry about sealing or painting.
With the variety of styles and colors available, it’s easy for homeowners to mix and match to create a custom look. Mortarless options like ClipStone are designed to be installed with screws and common tools, making them accessible options for both professionals and DIYers. With a built-in water management system, overlapping edges to minimize gaps, reversible outside corners and a variety of accessories, mortarless options allow homeowners to achieve the look of traditional masonry without the hassle.
Exterior features often bring a big return on investment because a home with strong curb appeal can make a great first impression on potential buyers. The garage doors are no exception. If you think of your garage doors as a purely functional element of your home, you may be surprised to learn garage door replacement is actually the best home upgrade you can make, according to the report.
Garage doors aren’t just functional; they can be a focal point of your home’s exterior design, completely transforming the exterior. Depending on the style and features you choose, an updated garage door is also a smart strategy for managing climate and adding security to your home.
Windows are another smart investment for numerous reasons. Not only do they provide a sophisticated presence that can greatly enhance curb appeal, upgraded windows play a major role in energy conservation. Homeowners also rely on windows to make a bold statement. For example, Simonton black exterior windows and patio doors can help perfect a wide range of architectural styles including farmhouse, modern, industrial and contemporary designs.
This award-winning line of vinyl windows offers homeowners a variety of styles and colors to customize both their home’s interior and exterior spaces. The windows are AAMA Gold Certified, passing some of the industry’s most stringent quality assurance testing for air leakage, water penetration and wind pressure – resulting in low-maintenance windows with lasting durability, weather resistance and energy efficiency.
Adding a deck is an easy way to improve your home’s exterior appeal and increase your livable space. Wooden decks rank in the top 10 for ROI, according to the report. An attractive deck situated off the living room or kitchen can make those rooms feel larger, especially when you’re entertaining, and guests can circulate freely between indoor and outdoor spaces. A well-constructed deck also serves as a transition point from the home to the backyard, where you may invest in even more outdoor living features.
You’ll achieve the greatest ROI by designing your deck to integrate seamlessly with your home and landscaping and even stone accents. Also take functional features into consideration, including privacy and protection from the wind and sun. Depending on your climate, it may be beneficial to design a deck for maximum shade during the warm months or to make the most of sunlight during the cool seasons. Features like built-in kitchens, stone accents, TV mounts and access to water features all lend high-end custom touches that also boost ROI.
If you’re considering updating your home’s color and trim, re-siding is a great way to transform its curb appeal while also earning a hefty return on the investment and giving yourself (or a future owner) the gift of lower maintenance living.
With 15 different collections, Ply Gem Mastic has an array of solutions to help homeowners transform their living spaces such as board and batten, hand-split shake shingles, traditional Dutch lap siding and more. Each is available with detailed wood grain texture in a variety of rich, on-trend colors, including increasingly popular dark options.
One of the simplest projects in the report, a new entry door can also make a big impact because it’s one of the first things potential buyers see. Not only can a steel door help make a good first impression, it also serves as an updated security feature and can offer additional insulation, which makes for a good investment if you live in an area that experiences extreme weather.
When you decide to renovate your home – whether to sell or make improvements for you and your family to enjoy – setting a budget can be a challenge. Knowing what you want to accomplish may be the easy part but avoiding the bad advice out there and determining what you can actually afford takes research and detailed planning.
Consider these tips from National Association of the Remodeling Industry (NARI) member contractors to help build an appropriate remodeling budget.
Identify your project scope and ideal budget. Start by creating a list of everything you would like to include in your renovation then separate your list into wants and needs. From there, determine a proposed budget for the project based on how much you’re comfortable spending and your home’s value.
“Get your bids after you know what the project is,” said Michael Anschel, principal of OA Design+Build+Architecture.
Meet with remodelers. Set up a meeting with a local remodeling company and share your proposed scope of work and budget to see if it’s feasible. An experienced, professional remodeler who is a member of an organization like NARI can share feedback on the costs in your area and any challenges involved with your project based on experiences with homes like yours. Once you have a better understanding of the true scope of the project, meet with other contractors to gather a few estimates to compare.
“Are you hiring an installer or are you hiring an expert guide?” asked Barak Steenlage, co-owner of Anchor Builders. “The difference is worth the investment.”
Beware of low estimates. When evaluating companies for your project, remember estimates you may find online don’t typically account for regional variations, the cost of various types of labor and necessary permits.
“Cost estimates you find may be national averages that are lower than the costs in your city,” said Bjorn Freudenthal, homeowner advisor at New Spaces. “Also, they may only account for the cost of the replacement materials, not other costs like changing the floor plan or updating electrical, plumbing and HVAC systems. They might also be missing the costs of removal of hazardous materials like asbestos and lead paint.”
The COVID-19 pandemic has also caused some materials to rise in cost, so it’s important to account for these increases.
“Bad contractor stories come from people cutting corners and hiring unqualified people,” Anschel said. “When you’re paying bottom of the barrel, there’s no bandwidth for the contractor to solve problems.”
Ensure you have proper permits. Not all projects require permits, but it is important to determine if your project requires one from your city or county. Make sure you (or your contractor) obtain one, if necessary, to ensure the safety of the work and its compliance with building, construction and zoning codes.
“If a homeowner or contractor doesn’t pull permits and something goes wrong, the homeowner is liable to fix the problem,” Anschel said. “This additional cost could be a large percentage of the original job, and maybe more.”
Understand your timeline. The purpose of your renovation can impact the long-term value of the project. Making updates to prepare your home to sell, for example, is a more immediate cost than updating a space you will spend time in for years to come.
“When the homeowner is looking to stay 7-10 years or more, it impacts lifetime value because you can spread the cost out over a longer period of time,” Steenlage said.