Homeowners are continuing to have a variety of difficulties pertaining to their monthly mortgage payments, but some are attempting to erase their mortgage debt as quickly as possible in the hopes of owning their home outright and putting these monthly payments towards other investments, like a retirement plan. While some homeowners have used options like cash-in refinancing as a way to put money towards their mortgage, which can lead to a shorter repayment time frame, or have simply refinanced to a shorter mortgage.
However, an interesting question was recently raised in a CNN Money article asking whether homeowners should attempt to pay off their mortgage or apply additional funds they may have originally used to pay on their home towards a retirement account. While the answer to this question is often simply a personal decision, many homeowners have seen their home as less of an investment, thanks to problems in the mortgage industry and the loss of property values which have been seen across the nation.
As a result, some homeowners are turning to retirement accounts rather than focusing money to erase their mortgage debt and many are choosing retirement options like a Roth IRA to begin saving for their retirement years. While there are various opportunities for homeowners to use, when it comes to retirement accounts, many individuals have opted for either a 401(k) plan or a Roth IRA in order to save money, which may be greatly needed upon one’s retirement.
Yet, while 401(k) plans are quite popular, more individuals have been considering or turning to Roth IRA accounts due to the tax advantages which can be used later in life. A Roth IRA is a good option for certain investors for a variety of reasons, but one of the main draws to this retirement account is the tax exempt withdrawal of earnings that investors have if they meet the criteria for this Individual Retirement Account.
While retirement plans like 401(k)s or Roth IRAs are not the only type of investment that homeowners can use, they are some of the more common retirement plans which homeowners are choosing to invest in rather than their home. In days past, homeowners could pay off their mortgage and perhaps sell their home at a profit later in life, which would allow them to relocate to a smaller living arrangement and have money left over. Yet again, homeowners are finding less certainty in the housing market for numerous reasons and, may in some cases, benefit more so from retirement planning than erasing their mortgage debt ahead of schedule.