FIRE Movement: How to Retire Early Without Mortgage Debt

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If you have a personal financial goal of early retirement, you might be wondering how your mortgage might affect that. Learn more about paying your mortgage before retirement. (iStock)

According to one in three Americans, early retirement has become a financial goal. financial research firm Hearts & Wallets report… Early retirement usually means becoming financially independent before eligibility for Social Security. FIRE movement, which means “financial independence, early retirement, “is based on a goal that you can save and invest actively to shorten the time it takes to retire.

Investing in a retirement fund can certainly help you financially, but getting rid of debt like mortgages before retirement can also free up tons of money. Plus, you don’t have to think about significant mortgage payments every month over the course of your retirement years. Luckily, you don’t have to choose between early retirement and paying off your mortgage.

Planning early retirement becomes even easier when you can pay off your home loan at a lower interest rate. Use an online mortgage marketplace like Credible to compare mortgage rates and save for retirement.

HOW TO FIND OUT IF YOU ARE READY to fire early

See how the mortgage fits into your budget

People seeking early retirement often deposit 50% or more of their income in savings and retirement accounts. First, you need to ask yourself if you can manage your mortgage by actively investing in your retirement fund. Trying to achieve both goals at the same time may require you to buy a smaller home or move to a more accessible area of ​​the country with moderate real estate costs.

Anyway, you will want to use an online mortgage calculator, like this one from Credibleto help you determine how much your monthly payments will cost. After you calculate your potential mortgage payment, assess if there is room in your budget for additional savings and additional mortgage payments. You may need to adjust your budget and make some cuts to keep your life comfortable while paying off your mortgage and pursuing the goal of achieving FIRE.

REFUSAL OF STUDENT LOANS? WHAT TO DO FIRST

Eliminate all other debts before taking out a mortgage

Mortgage debt usually has a much lower interest rate than other types of debt. This is why it would be more financially wise to settle all your other consumer debts and keep your mortgage on the last one.

Since credit card interest rates on new accounts hover around 20%, set a plan pay off all credit card balances and keep them paid. You can then move on to personal loans, car loans, and student loan debt. When your mortgage is your only remaining debt, you only have two main financial goals:

  • Save and invest for retirement
  • Make additional mortgage payments

Paying off the rest of the debt can free up hundreds to thousands of dollars that can be spent on savings every month. In addition, you will lower your credit utilization ratio, which is your account balance compared to the total credit limit that was given to you. This can increase your credit score exponentially.

HOW TO MANAGE BEFORE RELEASE LONG

Get the lowest mortgage rate

If you are looking to buy a home now, the great thing is that mortgage rates are still low. Securing a lower mortgage rate can save you tens of thousands of dollars over the life of your loan. Using an online loan marketplace such as Credible helps you compare mortgage rates and loan offers from lenders in the most efficient way.

If you already have a mortgage but want to lower your interest rate to save money, Credible can help you. compare the best mortgage lenders to help you refinance your mortgage. Shopping lets you know that you are getting the lowest mortgage interest rate for your financial situation.

DO YOU HAVE TO REFUND YOUR MORTGAGE IF YOU ARE PLANNING TO CHOOSE A JOB?

Pay off your mortgage quickly

Of course, you will want to pay off your mortgage faster as you actively save and invest. If you have a 30-year mortgage, consider making additional core payments every month or bi-weekly payments. If you get paid biweekly, you will automatically make an additional mortgage payment every year, switching to biweekly payments.

You can also refinance your mortgage for 15 years so that most of your payment goes towards paying off the principal of the mortgage. Speed ​​up mortgage payments by investing extra money in the form of job bonuses, tax refunds, or other windfall cash income to pay off your mortgage loan.

HOW TO STORE WHEN RELEASED IN 2021

Early retirement with a mortgage is possible

Typically, people pursuing FIRE save 50% of their income, pay off debt, and maximize investment in order to achieve financial independence in their 30s, 40s or 50s. However, it is possible to retire early and pay off your mortgage. This will free up more money in your budget and relieve you of the stress of having to make a large monthly housing payment that eats away at your retirement income.

Informed financial planning is the key to early retirement. Save money where possible by securing a lower interest rate on your mortgage and paying off other high-interest debt.

You will need a place to live, whether you are retired or not. So consider using Credible for search for the best mortgage rates and suggestions so you can find the best mortgage option.

Have a financial question but don’t know who to contact? Write to a safe money expert at moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.

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