When it comes to paying off the house, a lot of people ask the best way to go about it. Should you pay it off as soon as you can? Or do you pay it off slowly since the interest rate is low?
Alan says to start by considering your own financial goals. If you have cash sitting in the bank and want to pay it off, go for it! But you probably don’t want to take money out of your retirement account just to pay off the house early. Have you done the math on your plan? Everyone’s situation is different, so you want to make sure your plan aligns with your goals and with your finances.
If you’re an empty nester and just about to retire, is it worth downsizing? After the kids move out of the house you may be tempted to downsize in hopes of reducing your mortgage. The reality is, you may move into a smaller space but that doesn’t necessarily mean you’ll save money in the process.
Should you consider owning a rental property as a source of income? Think about whether or not you want to be a landlord. Rental income overall is great, and when it comes to your portfolio in retirement, income is your number one goal.
You also want to keep in mind how the home may pass to your heirs. Some decide to put their adult children on the title, but is this a good idea? Alan and Troy share some of the reasons why you may want another strategy. There’s a lot of nuances when it comes to how to handle the house. Be sure to reach out to your financial advisor and have a conversation about what’s best for you.
Listen to the entire episode or skip ahead using the timestamps below.
0:51 – What’s it like being a snowbird?
2:31 – When should you pay off the house?
5:22 – Should you downsize?
7:17 – Is a rental property a good investment?
10:08 – What complications could you face when legacy planning?
13:25 – Should you take money out to pay off the house?