Should I Refinance My Mortgage or Keep Paying?
Editor's note: This is one of the 20 tough financial questions posed in the “Do This or That?” cover story in the September 2011 issue of Kiplinger’s Personal Finance.
Editor's note: This is one of the 20 tough financial questions posed in the “Do This or That?” cover story in the September 2011 issue of Kiplinger’s Personal Finance. Use the drop-down menu above to consider other financial conundrums and the right answers for you; share your own experiences and insights in the Discuss field at the bottom of this page.
Pay off the mortgage if you are nearing retirement and would like to be debt-free—and you have enough nonretirement money to pay it off. (Every penny you withdraw from your 401(k) or traditional IRA is taxed at your ordinary income tax rate, plus you may pay a 10% early-withdrawal penalty, depending on your age.)
Dumping the debt also makes sense for conservative investors who don’t think they can earn a higher interest rate on the cash than the rate on their mortgage. Make sure you have sufficient savings left over to handle large future expenses, says Bud Hebeler, retirement-planning expert and creator of www.analyzenow.com.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Keep your mortgage if you can comfortably handle the payments and you enjoy sizable tax deductions for your mortgage interest—and you don’t need the emotional satisfaction of being mortgage-free. Or do a little of both: Accelerate your mortgage payoff by paying a little extra each month or refinancing with a shorter-term loan. In early July, the average rate on a 15-year fixed-rate mortgage was 3.8%, according to Freddie Mac. If you’re within a few years of retiring your mortgage, closing costs are likely to outweigh the benefits of refinancing. Run the numbers with a refinancing calculator at www.mtgprofessor.com.
SEE ALSO:
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
-
Prior Authorization Coming to Traditional Medicare Starting in 2026
The Centers for Medicare and Medicaid Services (CMS) will implement prior authorization requirements for certain traditional fee-for-service Medicare services in six states starting next year.
-
The 60-40 Portfolio Rule of Investing: Not Dead Yet?
Adding alternative investments to a balanced portfolio can smooth out returns.
-
Amazon Resale: Where Amazon Prime Returns Become Your Online Bargains
Feature Amazon Resale products may have some imperfections, but that often leads to wildly discounted prices.
-
Roth IRA Contribution Limits for 2025
Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
-
How to Search For Foreclosures Near You: Best Websites for Listings
Making Your Money Last Searching for a foreclosed home? These top-rated foreclosure websites — including free, paid and government options — can help you find listings near you.
-
Luxury Home Prices Rise as the Rich Dodge High Mortgage Rates
Luxury home prices rose 9% to the highest third-quarter level on record, Redfin reports, growing nearly three times faster than non-luxury prices.
-
Four Tips for Renting Out Your Home on Airbnb
real estate Here's what you should know before listing your home on Airbnb.
-
Five Ways to a Cheap Last-Minute Vacation
Travel It is possible to pull off a cheap last-minute vacation. Here are some tips to make it happen.
-
How Much Life Insurance Do You Need?
insurance When assessing how much life insurance you need, take a systematic approach instead of relying on rules of thumb.
-
When Is Amazon Prime Day? Everything We Know So Far, Plus Early Deals
Amazon Prime Amazon Prime Day is four days this year - July 8 through 11, 2025. Here are the key details you need to know, plus some of our favorite early deals to shop ahead of and during the sale.