How to pay your mortgage off before you retire...

Most people want to pay their mortgage off before they retire. It’s a good plan because if you don’t have a mortgage payment to worry about when you’re retired, you can often live more freely in retirement. If your goal is to have your mortgage paid off before you retire, this information is for you.

Here are three simple suggestions on how to pay off your mortgage as soon as possible

1. Change how you pay your mortgage

The majority of the people that I see in my mortgage practice have the pay that they earn deposited directly into their bank account and then make their mortgage payment. To accelerate the payment on your mortgage, there are ways to deposit your entire pay directly into your mortgage and then move the money into an account to pay for your day-to-day living expenses.

The benefit of paying your mortgage this way is that by depositing your pay directly into your mortgage you are significantly accelerating the payment. Your money is still easily accessible for day-to-day living. There are also handy tools attached to this type of mortgage that allow you to decrease the fees that you pay on banking and help you budget for your lifestyle.

2. Think of a floating mortgage rate

In the last three years, more people have considered a variable rate mortgage because of the low rates. Historically, research shows that people tend to pay less money in interest over the long-term with mortgages that have floating rates based on the prime rate. Floating-rate mortgages have come a long way and there are many ways to create stability and protect against changes in the rate, while allowing you to pay less money in interest.

3. Budget : A little pain means long-term gain

Develop a family budget so that you understand how much money you have coming into your household versus your expenses. Many people choose longer amortizations because they are unsure of how much they can actually afford in a mortgage payment. I’ve found that working with my clients and helping them create a budget shows they can be more aggressive with paying down their mortgage and shortening the amortization, while not impacting their lifestyle significantly. Shortening an amortization can save thousands of dollars in the interest paid.

Now’s a great time to revisit your mortgage, especially if you’d like to pay it off before you retire. Rates are low and there are many good options.

Pay attention to the econmy and its effects on mortgage rates.

It would appear that things are turning the corner. At least that’s what many people are assuming since the unemployment rate dropped 0.3%. The September unemployment rate of 8.4% was lower than many expected and as a result it pushed the yields up on fixed-rate bonds. Stock markets have seen a similar rise. This will lead many mortgage lenders to bump their fixed-rates up a bit, until another set of data comes out to suggest things aren’t as rosy as they had appeared.

Most gains in the economy came in the manufacturing and construction sectors, which will be a surprise to most given the state of affairs in the auto industry. The province posting the largest gains was British Columbia. Ontario ended the month pretty neutral, with gains offset by losses in part-time work. Frankly, I will take gains in the full-time workforce over the part-time work force as it leads to a stronger economic base of consumers.

The strenght in employment will be a precursor to a rise in mortgage rates. The latest report suggests that things are improving; however, we will need to see 2 to 3 months of improvement in the unemployment figures before we see rates really start to take off. If you are going with a variable rate mortgage (or already have one) start paying attention to the fixed rates as the current rates will be gone quickly.