Mortgage-free homeownership becomes a popular retirement goal

Alongside travel and leisure, a recent study by Voya Financial identified homeownership as one of the most important goals that people wish to achieve by the time of their retirement, reported HousingWire. In fact, 80 percent said they wish to eventually own their home with no mortgage payments by the time they retire.

Though this is an ideal situation, the survey suggests that the hopes of respondents may be a bit optimistic. While a quarter of retired respondents still have a mortgage payment, more than 50 percent of them have a balance of $50,000 or more.

Most people think that recent tax cuts and access to equity paired with paying off a mortgage will lift a financial weight off their shoulders, but it is not always a solid solution.

“There’s one huge drawback to owning property in retirement, and it’s committing yourself to a variable expense while living on a fixed income,” Maurie Backman wrote in an article for the Motley Fool. “Even if your mortgage itself is paid off by the time you enter retirement, you’ll still have property taxes to contend with. And those have a tendency to rise over time, even during periods when home values don’t follow suit.”

Backman notes that homeowners never know what to expect when owning a home, which is why residents should be wary as they fulfill their retirement goals. Because many retirees live on a fixed income, it can be difficult to predict what their financial landscape will look like. Many people need an additional source of income to remain financially secure as homeowners. This is why some older homeowners take out a reverse mortgage, because it eliminates owners’ monthly mortgage payment, granting them access to cash that usually boosts their income during retirement. But the rules around reverse mortgages were recently altered by the Department of Housing and Urban Development and the Federal Housing Administration, leading to a decline. Despite the shift, that sudden drop may very well spike back up as the population of older homeowners with a desire to own their home continues to grow.