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.
Eliminate your late tax debt
Each year, the IRS forgives millions in unpaid taxes. If you have more than $10,000 in tax debt, or have 3+ years of unfiled taxes, you could get forgiveness too. You might be eligible to lower the amount you owe, or eliminate your tax debt completely.
Easy Tax Relief could help you lower or get out of your tax debt for good. They’re well respected in the industry and have been recognized for their ethical standards when dealing with tax debt. While most tax companies just put you on a payment plan and file your taxes for you, Easy Tax Relief talks to the IRS directly. They can help you pay off your tax debt faster while potentially reducing what you owe.
Important: Not everyone will qualify. To take advantage of this special program you must owe more than $10,000 in past-due taxes.
Fill out this form to get started
Decide if you’ll stay in the house forever (or a long time)
![planning design of their new home](https://cdn.financebuzz.com/filters:quality(75)/images/2023/11/20/planning_design_of_their_new_home.jpg)
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
![man sitting at table with files and documents using calculator](https://cdn.financebuzz.com/filters:quality(75)/images/2023/03/29/man-using-calculator-to-calculate-loan.jpeg)
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
![house paper model US dollar hessian bags on a wood balance scale](https://cdn.financebuzz.com/filters:quality(75)/images/2023/03/04/house_paper_model_us_dollar_hessian_bags_on_a_wood_balance_scale.jpg)
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.
Earn $200 cash rewards bonus with this incredible card
There's a credit card that's making waves with its amazing bonus and benefits. The Wells Fargo Active Cash® Card(Rates and fees) has no annual fee and you can earn $200 after spending $500 in purchases in the first 3 months.
The Active Cash Card puts cash back into your wallet. Cardholders can earn unlimited 2% cash rewards on purchases — easy! That's one of the best cash rewards options available.
This card also offers an intro APR of 0% for 12 months from account opening on purchases and qualifying balance transfers (then 20.24%, 25.24%, or 29.99% Variable). Which is great for someone who wants a break from high interest rates, while still earning rewards.
The best part? There's no annual fee.
Optimize retirement contributions
![Document with title 401k plan on a table](https://cdn.financebuzz.com/filters:quality(75)/images/2023/08/09/document_with_title_401k_plan_on_a_table.jpg)
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
![Keys on a mortgage application](https://cdn.financebuzz.com/filters:quality(75)/images/2022/07/29/keys_on_a_mortgage_application.jpg)
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
![stressed businessman choosing card for bills](https://cdn.financebuzz.com/filters:quality(75)/images/2023/09/30/stressed-businessman-choosing-card-for-bills.jpeg)
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
![holding house model while writing on notepad](https://cdn.financebuzz.com/filters:quality(75)/images/2023/01/30/hand-holding-house-model-while-writing.jpeg)
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
![jlass jar labeled](https://cdn.financebuzz.com/filters:quality(75)/images/2023/05/03/money-in-glass-jar-with-emergency-fund-label.jpeg)
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
![company leader giving money bonus in paper envelope](https://cdn.financebuzz.com/filters:quality(75)/images/2023/06/14/company_leader_giving_money_bonus_in_paper_envelope.jpg)
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.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
How to become a member today:
- Go here, select your free gift, and click “Join Today”
- Create your account (important!) by answering a few simple questions
- Start enjoying your discounts and perks!
You’ll also get insider info on social security, job listings, caregiving, and retirement planning. And you’ll get access to AARP’s Fraud Watch Network to help you protect your money, as well as tools to help you plan for retirement.
Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.
Consider seeking professional advice
![Senior couple strategizing their investment plans.](https://cdn.financebuzz.com/filters:quality(75)/images/2023/08/11/financial-advisor-guiding-couple-about-investments.jpeg)
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
![credit score on the screen of smart phone](https://cdn.financebuzz.com/filters:quality(75)/images/2022/04/16/credit_score_on_the_screen_of_smart_phone.jpg)
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
![woman sit at desk manage budget](https://cdn.financebuzz.com/filters:quality(75)/images/2023/08/09/woman_sit_at_desk_manage_budget.jpg)
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
![happy family mother father and children move to new apartment](https://cdn.financebuzz.com/filters:quality(75)/images/2022/07/08/happy_family_mother_father_and_children_move_to_new_apartment.jpg)
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.
Lucrative, Flat-Rate Cash Rewards
FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.
Wells Fargo Active Cash® Card
Current Offer
$200 cash rewards bonus after spending $500 in purchases in the first 3 months
Annual Fee
$0
Rewards Rate
Earn unlimited 2% cash rewards on purchases
Benefits
- Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
- Cell phone protection benefit (subject to a $25 deductible)
- Can redeem rewards at an ATM for literal cash
Drawbacks
- Foreign transaction fee of 3%
- No bonus categories
- Select “Apply Now” to take advantage of this specific offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 20.24%, 25.24%, or 29.99% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.