Estimate Mortgage Payment | Should Ailing Husband Pay Down Mortgage?

Dear Dr. Don,
I am in unwell health. Should you endeavor to pay off the mortgage? We have small savings, about $10,000, with other $15,000 in stocks. I have $120,000 in life insurance. My wife's usually income after I pass will be the Social Security Survivors Benefits, that are about $1,800 per month net.

We live in a 55-plus community, and the mortgage , with 25 years remaining, is $185,000. Our skill taxes are a small more than $350 per year and the HOA fees are $250 per month. Without the mortgage payment of $1,100 per month, my spouse feels she can tarry on Social Security.

My spouse would similar to to endeavor to pay off the mortgage and feels you can do that inside of 5 years. My regard is that I might not live long sufficient and consternation if you should sock divided as much allowance as probable instead. Our monthly income at present is $6,400 from pension income and Social Security. We have managed to pay down a $45,000 credit card debt and right away have usually 3 years left on a $27,000 vehicle loan with a $500 monthly payment. Any recommendation is welcome.

We drop in to the ill-prepared difficulty of retirees, but we've lifted 6 children, sent them to college and paid for 3 weddings on a salary, so greatfully do not panel of judges us as well harshly.
-- Tom

Dear Tom,
I'm not here to judge, I'm here to help. You've every right to feel unapproachable of your accomplishments in raising and educating your children. I am extraordinary because you didn't select a joint-and-survivor gain choice for your pension. But I have the value of hindsight, and the life insurance process might have been put in place to casing your wife's need for income after your death.

My order of ride in prepaying a mortgage is that you pay down your mortgage when you design the efficient rate on your loan will be aloft than the approaching after-tax lapse on your investments.

The more conservatively you invest, the simpler it is to clear creation extra leading payments on your mortgage. That's notably loyal if you use the typical charge on your income taxes or do not entirely implement the mortgage fascination charge on your income taxes. Over a five-year formulation horizon, I think you're improved off with the certain thing, creation extra leading payments on the mortgage.

To pay off the $185,000 loan balance in 5 years would take an extra leading payment of about $2,400 per month over and on top of your $1,100 monthly mortgage payment. The $3,500 responsibility any month is about 55% of your $6,400 monthly income. Put a $500 automobile payment on top of that and you've committed 62.5% of your monthly income to these loans for 3 of the 5 years. You'll know improved than I either that's pragmatic in your monthly budget. My theory is that you can lower the balance by a lot but won't be able to pay it off in 5 years. If you should pass, the life insurance gain could be used to pay off the mortgage.

Alternately, your spouse could use the life insurance allowance to buy an payments to addition her monthly income. The ImmediateAnnuities.com website can give an estimate of the monthly income generated from the buy of a prearranged annuity.