Ways to Retire Without a Mortgage

Make Extra Mortgage Payments

A little extra goes a long way. A $225,000 mortgage at 5% over 30 years works out to a monthly payment of about $1,200 (excluding taxes and insurance). You'll pay about $210,000 in interest alone over the life of the home loan. But put an extra $100 a month toward the same mortgage and you'll save nearly $40,000 less in interest and retire the loan five years early.

Refinance Your Mortgage

Switch to a shorter-term loan Let's say you're 50 years old and you have 25 years left on an original 30-year, $225,000 mortgage at 5% and still owe around $200,000. You'd pay about $155,000 in interest on the original mortgage over the remaining quarter century -- and be mortgage-free at 75 years old. For about $320 more per month, plus one-time closing costs, you could refinance to a 15-year mortgage at 4% and save $87,000 in interest. And, of course, you'd be mortgage-free a decade earlier at 65 years old.

Downsize Your Home

Just because you spent the past 30 years in a traditional ranch doesn't mean you need to purchase another ranch with less square footage. Check out conventional alternatives (condos, townhouses) as well as unconventional options (houseboats, RVs or even tiny retirement homes).

Relocate to a Cheaper City

Home prices aren't the only factor when considering relocation. You need to weigh taxes, too. In New Jersey, for example, property taxes run $7,452 a year on a typical home so it could be better option for commuters who work in NYC
Feeling adventurous? You might be able to pay even less for a home and enjoy lower living expenses if you retire overseas. Look into bargain-priced and Belize, Costa Rica, Mexico and the Philippines.

Get a Roommate

By letting out a spare bedroom and applying the rent you collect to your mortgage, you can knock years off the time it'll take to repay the loan. An extra $250 a month toward a $150,000, 30-year mortgage at 5% will erase the debt 12 years early. An extra $100 a month retires the mortgage six and a half years early.