A good age to have your house paid off is generally by your early-to-mid 60s, ideally just before retirement, to reduce monthly expenses and financial stress. While some experts suggest aiming for age 45 to 50 for early freedom, focusing on it after age 45 allows you to balance mortgage repayment with investing.
The average age to pay off a mortgage in the U.S. is around 62, with many becoming mortgage-free in their early 60s, coinciding with or just after typical retirement age, though figures vary by source. While some financial experts suggest paying it off by 45 for aggressive investing, data shows a significant portion of homeowners, especially older ones (60+), are mortgage-free, but increasingly, older adults (60s, 70s, 80s) carry more mortgage debt than previous generations, according to Marketplace.
18% of homeowners under age 44 have paid off their mortgage (link provided)
“If your mortgage rate is around 3 percent, it might not make sense to pay it off early.” But, he adds, “if you have a newer mortgage with a rate closer to 6 or 7 percent, putting extra money toward your mortgage can be a smart move, since it's harder to find low-risk investments that pay that much.”
You might not want to pay off your mortgage early if …
Your cash reserves are low: You don't want to end up house rich and cash poor by paying off your home loan at the expense of your reserves. We recommend keeping a cash reserve of three to six months' worth of living expenses in case of emergency.
Suze Orman strongly advocates paying off your mortgage by retirement for financial freedom and peace of mind, but her advice on how varies by situation, often prioritizing a solid emergency fund and retirement savings first, especially if interest rates are low. While she pushes for paying down debt aggressively (even reducing retirement savings beyond the 401(k) match), she cautions against draining savings for low-interest mortgages if it leaves you vulnerable to job loss or emergencies, suggesting you should have a strong safety net before using savings to pay it off.
The average age to pay off a mortgage in the U.S. is around 62, with many becoming mortgage-free in their early 60s, coinciding with or just after typical retirement age, though figures vary by source. While some financial experts suggest paying it off by 45 for aggressive investing, data shows a significant portion of homeowners, especially older ones (60+), are mortgage-free, but increasingly, older adults (60s, 70s, 80s) carry more mortgage debt than previous generations, according to Marketplace.
“Paying off your mortgage early seems impossible but it is completely doable and people do it all the time, but how can you do it and why would you want to put in the extra effort? Paying off your mortgage early will rev up your wealth building.”
The 3-7-3 Rule in mortgages isn't a loan type but a federal timeline from the TILA-RESPA Integrated Disclosure (TRID) rule, ensuring borrower protection by mandating disclosures within 3 business days of application, a 7-business-day wait between the initial Loan Estimate and closing, and another 3-day wait if significant changes (like APR) occur, giving borrowers time to review costs before committing to a loan.
Mortgages make up about 70% of household balances. Conventional wisdom has long recommended that homeowners pay off their mortgage before retiring. Yet over the past three decades, more older adults are carrying their mortgage into retirement, while the amount owed has increased dramatically.
According to Census Bureau data, while approximately 63% of homeowners aged 65 and over have fully paid off their homes, less than 28% of working-age homeowners (under 65) have done so.
By the age of 50 it is ideal to be debt-free, and your retirement savings should be enough to give you a comfortable life. Retiring with debt can be a stressful.
As a homeowner, your equity is your biggest advantage in today's market. If you're mortgage-free (or close to it), it could give you the power to buy your next home in cash. That means you'd still have no mortgage payment in retirement, plus: Less financial stress as you age.
The following savings guidelines can be a starting point for evaluating your progress toward a fully funded retirement. These rules of thumb say you should have saved ... 2 to 3 times your income by age 40. 3 to 4 times your income by age 45.
Cons of paying your mortgage off early. It can keep you from saving or paying off other debt—Draining your bank accounts to pay off a mortgage can be very risky. Most experts recommend prioritizing a few other things before you tackle paying off a mortgage.
So a mortgage is the one kind of debt we don't yell at you for. But if you go that route, stick to the 25% rule—remember, that means never buying a house with a monthly payment that's more than 25% of your monthly take-home pay.
Tax considerations: You may be able to deduct home mortgage interest from your taxes. 2 However, if you pay off your mortgage, you won't be able to utilize this deduction, which could increase your taxable income. To learn more about the tax implications consider speaking with a tax advisor.