Share to linkedinThe idea of living mortgage-free can be particularly enticing for individuals nearing retirement. At this time, it’s also common for empty-nesters to consider selling the large family home in favor of a smaller property or condo that’s easier to maintain.
If they obtain a mortgage, they’ll make the mortgage payments out of their income while they’re working. Without a mortgage, they’ll invest the funds instead. If they retire with a mortgage, the Miller’s will tap their investment account for the payments once they stop working. In this example, it’s best to use leverage. Through the power of compounding, after 30 years, the Miller’s investment account would be nearly $260,000 greater if they bought the home with a mortgage compared to if they paid for the condo in cash, excluding taxes.
Getting a mortgage may make the transition easier for some buyers who already have a down payment and still qualify for their loan while carrying both homes, as they may be able to. Convenience has a price though, and there’s a risk the home won’t sell as quickly or at the price you expected.
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Source: Forbes - 🏆 394. / 53 Read more »