How to Retire: Have NO Mortgage!

What is the benefit of having no mortgage payments in retirement?

We’re going to find that out by referring to the Census Bureau data. I will do this review as a prerequisite for my next video about the best places to retire in the US. 

To help me determine which of the states are great for retirement, I will go through average household income, as well as the homeowners with and without mortgages. Here we will focus on Georgia so I can answer your questions about whether it’s better to pay off your mortgages before you retire or not.

Case Study: Alpharetta,GA

In Alpharetta, GA, my neck of the woods, 3,000 owner-occupied housings have no mortgage, which is around 35% of the total homeowner population. The median household value is $337,000 in the past 12 months.  33% of the city’s population has more than $150,000 in household income.  $106,000 is the median household income of all residents.

The median annual housing cost in Alpharetta without a mortgage is $7,600. Divide that by the median income of $106,000 and we find 7.2% of the median home owners expenses go to home costs.  Of the $7,600 for total housing costs, $3,200 of it is from property taxes, which is around 1% of the median home value. 

By looking at the data closely, you will notice that homeowners who have mortgages paid more in property taxes because of higher house values. 11,876 homes in Alpharetta have mortgages. $373,000 is the median value of properties that carry a mortgage. That is nearly 15% HIGHER value than those properties without a mortgage!  Thus, having a mortgage leads to higher value homes which lead to higher property tax.  Crazy, eh?

In Alpharetta, 20% of homeowners have both mortgages and home equity loans, which is not good. The data also shows the median household income, which is $133,000.  As we have seen previously, if you have a mortgage you also have higher property taxes and 20% of these people have SECOND mortgages too.  So, they pay more in taxes, more in housing costs due to carrying a mortgage yet they don’t make that much more money!  Again, not good. 

Based on the median values, there are more households with mortgages than without. The figures show a higher percentage of Alpharetta homeowners pay higher taxes because of the mortgages.  

Conclusion: No mortgage means lower property tax which means less retirement costs!

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