Home Debt Question

Dear Penny Hoarder,

My husband wants to retire from his job in about 7 years and we owe about 60k on our mortgage and have a 10 yr loan. This is a new loan for us and we are going to begin paying that one year interest. My question is, is it better to pull from retirement and pay off the mortgage and then put his paychecks back into his IRA for the next 7 years and take the tax hit? Would it be better in the long run and not pay the mortgage company all that interest money or leave retirement alone and let it stay invested? Thanks for answering.

My personal opinion is not to take money from his IRA. You and your husband may have good intentions on paying it back, but it may not happen. You will also have the tax hit, as you mentioned.

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I know it’s tempting, but it’s not a good idea to take money out of your IRA or to even borrow against it. You may not pay it back and there’s the big tax hit. I would sock as much money as I could on the mortgage and get it paid down as fast as possible. Look for additional income methods. If something bad happens, you have time to work at getting it fixed before retirement. If you’ve taken the money out of your IRA, you could be scraping for pennies in retirement. The cost of living goes up and up, we need our pensions to be as high as possible when we retire.

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I would think twice about touching your IRA. If your IRA includes stocks or mutuals and/or ETFs, the stock market is at historical highs while the interest rates on home mortgages are very low! Remember, typically, your home is an appreciating asset and. if that is true in your location, you should being realizing that (on paper, at least) over the next 10 years.

If you would ever find yourself in a financial crunch, liquidating your property can take a lot longer than liquidating an IRA in a true emergency. Another drastic option would be to borrow some of your equity in your home.

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Thank you all, I sincerely appreciate it.