Financial Guru Says You’re Not Ready to Retire Until You’ve Done This
My fellow baby boomers, we need to talk. More than one in three homeowners 65 or older is still paying off a mortgage. That’s a steep increase since the turn of the century, when less than 25% of older homeowners had housing debt.
And it’s not as if the remaining debt is some inconsequential sum. The median amount still owed among the 65 and older crowd was more than $80,000.
This is so not okay. If your intention is to stay put in the house you currently live in, you should make it your top priority right now to get the mortgage paid off before you retire. I will get to the financial reasoning in a minute. But just as important is the emotional payoff.
One of the best parts of my work is that I am constantly meeting people who want to talk about their financial plan. Just the other day I called to order something, and the salesperson was not shy asking for some retirement advice. I love it that people are so eager to share their lives. And when speaking with thousands of retirees over the years, there are two things I have never, ever heard:
“Oh, Suze, I am losing sleep because I don’t have a mortgage payment.”
“Suze, I really regret that I am living debt-free.”
Borrowers who experience financial trouble and fear losing their homes should seriously consider refinancing into a lower monthly mortgage payment. Doing so can help borrowers avoid missing home loan payments, going into loan default, and even foreclosure.
Refinancing a home loan is just one option that you can use to save your home from foreclosure, but depending on the timing and severity of your economic issues it may be the best option. Looking over the FHA/HUD official site’s list of foreclosure avoidance options, you’ll discover the following:
The Making Home Affordable (MHA) Program is described by the FHA as, “a critical part of the Obama Administration’s broad strategy to help homeowners avoid foreclosure, stabilize the country’s housing market, and improve the nation’s economy.”
FHA advises potential MHA applicants, “Homeowners can lower their monthly mortgage payments and get into more stable loans at today’s low rates. And for those homeowners for whom homeownership is no longer affordable or desirable, the program can provide a way out which avoids foreclosure.” There are even options for those who are unemployed, and for borrowers who are underwater on their home loans.
What are these options?
• Home Affordable Modification Program (HAMP): HAMP lowers your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income to make your payments more affordable. The typical HAMP modification results in a 40 percent drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more.
• Principal Reduction Alternative (PRA): PRA was designed to help homeowners whose homes are worth significantly less than they owe by encouraging servicers and investors to reduce the amount you owe on your home.
• Second Lien Modification Program (2MP): If your first mortgage was permanently modified under HAMP SM and you have a second mortgage on the same property, you may be eligible for a modification or principal reduction on your second mortgage under 2MP. Likewise, If you have a home equity loan, HELOC, or some other second lien that is making it difficult for you to keep up with your mortgage payments, learn more about this MHA program.
• Home Affordable Refinance Program (HARP): If you are current on your mortgage and have been unable to obtain a traditional refinance because the value of your home has declined, you may be eligible to refinance through HARP. HARP is designed to help you refinance into a new affordable, more stable mortgage.
Talk to a loan officer for more information on these programs, or call the FHA directly at 1-800 CALL FHA to learn more about saving your home using one of these options. You’ll be glad you did.