Financing in Piermont>Question Details

Zacky, Other/Just Looking in Piermont, NY

Would it make sense for a retired, 62 year old (collecting a pension and soc. sec) to cash in IRA monies to pay off a 6.5% mortgage of $108,500

Asked by Zacky, Piermont, NY Sun Jan 3, 2010

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2
Hi Zacky ~

It's a good question and better answered by a Certifed Financial Planner and/or your CPA who will review your entire financial picture in order to give you the best advice.

Without knowing the motivation for your question I would say this. If you can afford your monthly mortgage payment, there is a tax benefit to having that mortgage. Even though the note rate may be 6.5%, depending on your tax bracket, your mortgage is actually costing you less when the mortgage interest deduction is factored in. Also ... the money you withdraw from your IRA is going to be taxed as ordinary income (assuming it's not a ROTH account). A CFP or CPA can break it all down for you.

All the Best!

Barbara
1 vote Thank Flag Link Mon Jan 4, 2010
Zacky, a reverse mortgage is not what you are looking for unless you need additional income.

It is hard to advise without knowing your situation in it's entirety. Is your retirement income not enough to support your current lifestyle? Do you just not like the idea of having a mortgage payment since you have the funds to pay them off? Do you have other funds to rely on in case of emergency?

I don't know how many years you have left on your mortgage or if you have a 30 year, etc., but you may also want to consider refinancing to a shorter term mortgage. Your rate is fairly higher than the current market even if you have a 30 year fixed.

Feel free to post more information or to contact me, but you definitely should speak to your accountant or financial planner.

Good luck.
0 votes Thank Flag Link Sun Jan 3, 2010
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