Well you have done it!’
After years of carefully managing your finances you watch gleefully as the last payment is taken from your account signally the end of your mortgage. So now what? This week we are going to look at a few things to protect your now mortgage-free home.
1. CELEBRATE! This is a huge accomplishment and certainly deserves a mortgage freedom party/dinner or glass of wine.
2. Make sure the mortgage provider removes the lien on the property. Quite often this is missed and old mortgages stay on title. A phone call to your mortgage provider may be in order.
3. Consider getting a home equity line of credit. This may seem like I am pushing you backwards but hear me out. A HELOC can be taken for up to 65% of your property’s value.
You will incur the legal fees and an appraisal but there are no payments unless you draw down some of the funds.
There are a couple reasons you may want to consider this. The first is that if have not yet retired, qualifying for this type of a mortgage is easier than when you are on pension income.
It can be a valid alternative to have access to the equity in your home as compared to a reverse mortgage down the road. You are able to use your home equity as tax-free income which can allow your investments to stay intact and accruing interest even longer.
Perhaps you want to access some funds for home renovations to protect and increase the value of your home – this can be a great way to do that as well.
4. If a HELOC does not sit well with you, please consider getting a title insurance policy.
Fraud is rampant these days and land titles are a matter of public record. That means anyone can look up your home and see that it is free and clear which may make you a target of mortgage fraud.
You can get a title insurance policy through your lawyer as a measure of security against just that. It is a one-time cost starting about $300 and going up from there depending on the value of your home.
5. Contact your home insurance company. You may be eligible for a discount in premiums now that you are mortgage-free though this varies company to company.
6. Update your will. Mortgage freedom day is a great trigger to update your will.
We all know there are only two guarantees in life, death and taxes. Give your loved ones the gift of planning ahead so that they can move more smoothly through this difficult time.
A well-planned estate will save them an awful lot of money and we would all much rather our loved ones receive that money rather than the system.
7. Earmark the funds. Now that the mortgage obligation no longer applies you may want to reassign the funds to your retirement strategy.
You were used to paying that amount each month so why not continue to do so? Debt payout, retirement funds, family vacation, home repairs or whatever you have need of.
So please take the time to celebrate this great victory in your financial life! You certainly have earned it.
Pam Pikkert is a mortgage broker with Mortgage Alliance – Regional Mortgage Group in Red Deer.