The rule is simple and powerful: If you can pay off your mortgage with no more than one-third of your non-retirement savings, you should consider doing so. The down payment required will vary depending on the method used to assess your income. Make sure you have enough money saved for retirement to comfortably sustain you for the rest of your life. No money:If you need to dip into your retirement savings to get rid of your mortgage, maybe it’s best to skip paying it off for now. Debt isn't all bad. If you're retiring within the next few years and have the funds to pay off your mortgage, it may make sense for you to do so, particularly if those funds are in a low-interest savings account. Another scenario that will make home buying a wise move for pre-retirees is when you have at least 5 more years left before you retire. “I've had people ask if they should take out half of their 401(k) to pay off the mortgage, and the answer is no,” says Kristin C. Sullivan, a certified financial planner in Denver. But there is an exception to that rule: If you have 15 years or less until retirement and still have a mortgage that’s longer than 15 years, *and* you have not managed to save a sufficient amount of money for retirement, it is my belief that saving for your future should be your priority. More than half say they intend to enter retirement debt free, but only one-quarter of retired Boomers actually are debt free. Seniors should expect stricter scrutiny when applying for a mortgage loan. If you have a 30 year mortgage, that means you have locked in that record low rate for the next three decades. It’s not unheard of to get a mortgage after 60. If you have bad credit, take steps to improve it before you apply. “It’s an individualized situation. The exact requirements will vary from one lender to the next, but most require you to keep your debt-to-income ratio at 40% or less. The conventional wisdom is that you should pay off your mortgage before you retire. Debt can hurt your credit score if you end up falling behind on your payments, and it raises your debt-to-income ratio. More than one in four retirees surveyed still have an outstanding mortgage, with one in six of them owing $50,000 or more. This is especially true for those who have significant pensions and Social Security payments in … 5. ARTICLE: Should I Pay Off My Mortgage Early? That way you can get a sense of what you should be aiming for and make any necessary adjustments, like paying down debt or taking a little more money from your retirement accounts each month. But life isn’t always perfect. "If you run through your savings and still have a mortgage, you'll be hitting a higher hurdle than someone without a mortgage." Stock Advisor launched in February of 2002. Sometimes it's better to invest. Paying off your home mortgage before you retire is a major financial achievement, but you don't necessarily have to eliminate all housing debt in order to retire well. Of course it would be better to have no … If you can afford to put down a larger down payment, your chances of approval go up because you're now borrowing less money. Of course, no one can be sure exactly how long they're going to live -- so it's a good idea to overestimate just to be on the safe side. … Primary homes usually secure better mortgage rates than second homes. "Some can't, and they have to really look at their finances to determine if they can handle a mortgage payment in their retirement years." A mortgage is a big expense, and even if you do get approved for one, it isn't always the smartest financial move. If you're relying on Social Security, pensions, and money from your retirement fund, you can probably get by with putting down as little as 5%, though you'll have to take on private mortgage insurance (PMI) until you reach 20% equity. Then they take 70% of the result and divide it by the number of months in the loan term to come up with your theoretical monthly income. Both of these things can make it harder to secure a mortgage. Retirees are no longer working, so they cannot show traditional income from a job. Many mortgage lenders are apprehensive to give out loans to retired individuals due to fear of defaults. This can be an exciting time, but it can also be a challenging one, particularly if you plan to purchase a new home. Getting a mortgage in retirement poses some unique challenges, but it's not impossible. 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