3 Ways to Increase Your Chances of Being Mortgage-Free by Retirement

Here's how to shed your housing debt by the time your career wraps up.

As a general rule, mortgage debt is considered a healthy type of debt. That's because a mortgage allows you to eventually own an asset outright that could be worth a lot of money -- more money than what you paid for it.

But while mortgage debt may be a more favorable type to have than credit card debt, it's debt nonetheless. And that could prove problematic in retirement.

Retirees are often limited to a fixed income -- one that consists largely or solely of Social Security. Having to cover any sort of debt payment could constitute a financial hardship.

In a recent survey by Clever, 37% of retirees said they were still making payments on a mortgage. If you'd rather avoid that fate, here are three steps you can take to help ensure your home is paid off before your time in the labor force comes to an end.

1. Consider your mortgage term carefully

When you sign up for a mortgage, you can choose the length of your repayment period. If you opt for a shorter-term loan, you'll be more likely to pay it off before retirement.

Say you decide to buy a home in your late 30s. If you sign up for a 30-year mortgage, you may still have a few more years of payments on that loan by the time retirement rolls around. But if you're able to swing the higher monthly payments that would come with a 15- or 20-year loan, then you might manage to pay off your home before you retire.

2. Refinance when rates are low

Mortgage rates can fluctuate over time. If you find that rates have come down since you signed your mortgage, refinancing could allow you to shorten the term of your loan without increasing your monthly payments so substantially.

Imagine you're able to convert your 30-year fixed loan to a 15-year loan and shave six years off of your repayment schedule. If you lock in a low enough mortgage rate on that new loan, you may only end up paying a couple of hundred dollars more each month for the opportunity to shed that debt much sooner, thereby making it possible to be mortgage-free by retirement.

3. Don't take on too much house

If you take out a smaller home loan to begin with, you may have an easier time making extra payments on your mortgage as you come across spare cash. That could make it so you're free of housing debt by the time you're ready to leave the workforce.

But if you buy a home that's at the top of your price range, you might struggle to keep up with your mortgage payments, making it virtually impossible to squeeze extra money into your mortgage along the way. Before you rush to buy the biggest or most updated house you can afford, consider the benefits of not maxing out your budget.

To be clear, entering retirement with some remaining mortgage payments doesn't necessarily mean dooming yourself to financial struggles. But it's also not an ideal situation. And so if you'd rather your home be paid off by the time you retire, take these three steps to make that a more likely scenario.