Suze Orman's Best Advice to Pay Off Your Mortgage Before Retirement

There are plenty of good reasons to be mortgage-free by retirement.

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Updated July 18, 2024
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Paying off your mortgage before retirement is a big financial goal. Suze Orman, a renowned personal finance expert, provides insightful advice to help you achieve this.

Let's delve into key strategies recommended by Orman to make homeownership in retirement a stress-free reality as well as some general, common-sense advice to help you get there.

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Decide if you’ll stay in the house forever (or a long time)

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Before initiating a mortgage payoff plan, evaluate your long-term housing plans. If you intend to stay in your home for an extended period, strategically paying off your mortgage becomes more viable.

Orman recommends that you aim to retire comfortably and mortgage-free. Everything you owe, including your home, costs you money, but it can also affect your mental health. 

“Debt is bondage,” she says. “You will never, ever, ever have financial freedom if you have debt.”

Refinance strategically

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Timing matters — consider refinancing when interest rates drop significantly. Assess your current mortgage terms and explore opportunities for better rates or shorter durations.

The key is not just to lower your monthly payments but to use refinancing as a tool to pay off your mortgage faster.

Don’t wait to make extra payments

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Delaying extra payments hinders your ability to pay off the mortgage swiftly. Orman advises against procrastination, encouraging homeowners to make additional payments as soon as financially feasible.

“You can make one extra payment a year to help pay your mortgage down faster — either by making biweekly payments or by dividing your regular payment by 12 and adding that amount to each payment,” said Orman in a podcast.

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Optimize retirement contributions

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Prioritize retirement contributions alongside mortgage payments. 

Orman advocates for striking a fine balance between paying off your mortgage and securing your retirement through contributions to retirement accounts that don’t hinder your ability to pay down your mortgage.

“Scale back your 401(k) contributions so you invest only enough to get the company match. If your company doesn't offer a match, avoid investing altogether,” said Orman.

Consider a 15-year mortgage over a 30-year mortgage

Brian Jackson/Adobe Keys on a mortgage application

Orman says that “one way to save big is to choose a cheaper, 15-year fixed-rate mortgage over a 30-year one.”

Opting for a shorter mortgage term can be advantageous. Choosing a shorter-term mortgage reduces the total interest paid and expedites debt freedom.

By committing to a shorter mortgage term, individuals position themselves for accelerated equity growth and reduced financial burden in their retirement years.

Avoid additional debt

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Orman is a big fan of knowing what you can afford and staying out of consumer debt. Steering clear of accumulating additional debt while striving to pay off your mortgage is key.

Taking on more financial obligations can hinder your progress and strain your budget.

Prioritize essential expenses and prudent spending as well as avoid unnecessary loans or credit card debt. By maintaining a disciplined approach to your finances, you create a conducive environment for accelerating mortgage payments.

Consider downsizing

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Assess whether your current home aligns with your needs and financial goals. 

Downsizing can unlock equity, providing funds to expedite mortgage payments. It’s not the easiest decision to downsize, but Orman asks that you keep an open mind.

This decision aligns with optimizing your living situation and reallocating resources for mortgage repayment. A practical evaluation of your housing needs is important in ensuring they align with your financial objectives as you work toward a mortgage-free retirement.

Build an emergency fund first

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Before aggressively paying off your mortgage, it’s important to build a robust emergency fund

Unexpected expenses can arise, and having a financial cushion prevents you from diverting mortgage funds to emergencies.

This safety net ensures you can maintain mortgage payments during unforeseen circumstances, providing financial stability while pursuing your goal of mortgage freedom by retirement. 

Orman recently warned, “You have to have an emergency savings account.”

Leverage windfalls and bonuses

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When unexpected financial gains come your way, consider allocating a portion toward your mortgage. Whether it's a work bonus, tax refund, or any windfall, directing it to your mortgage can significantly reduce the principal.

This approach not only accelerates the payoff but also minimizes interest over the long term. Be sure to seize these opportunities to make substantial strides in your mortgage repayment journey.

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Consider seeking professional advice

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Engaging with financial experts, such as mortgage advisors or financial planners, can provide tailored strategies for paying off your mortgage efficiently. These professionals can analyze your unique financial situation, offer insights on refinancing options, and guide you in making informed decisions.

Seek expert advice to ensure your approach aligns with your overall financial goals and supports a secure retirement without the burden of mortgage debt. 

If you want a financial advisor, Orman says to “be sure they specifically state they are a fiduciary.” That means they have to put your best interests first.

Monitor your credit score

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Regularly checking your credit score is crucial when aiming to pay off your mortgage. A good credit score opens doors to favorable refinancing options and lower interest rates.

Always keep a vigilant eye on your credit report, addressing any discrepancies promptly, and maintaining a healthy credit profile. 

This proactive approach not only aids in mortgage management but also sets the stage for improved financial health as you plan for a debt-free retirement.

Cut down on unnecessary spending

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Identify non-essential expenses and redirect those funds toward your mortgage. Trimming discretionary costs allows for increased mortgage payments, reducing the overall interest burden.

By adopting a frugal approach, you not only expedite the journey to a mortgage-free retirement but also cultivate disciplined financial habits that contribute to long-term economic stability.

Bottom line

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By making your mortgage a top priority, considering mortgage terms, and taking proactive steps like extra payments and refinancing, you can pave the way for a mortgage-free retirement and more wealth.

These prudent financial moves, combined with optimizing contributions to retirement funds and considering downsizing, contribute to a holistic approach toward financial freedom in your golden years.

Have you been heeding Orman’s advice as well as the common-sense strategies? If not, consider the above to set yourself on a path to a mortgage-free retirement.

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Adam Palasciano

Adam Palasciano is a personal finance-obsessed and money-savvy individual who loves to hash out content on all things saving money. He specializes in writing millennial-friendly personal finance content, covering topics ranging from trending financial news, debt, credit cards, cryptocurrency, and more.