Before a move, pay down mortgage or save up?

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Dear Dr. Don,
I am a 50-year-old single man who has been aggressively paying down my home mortgage with the goal of eventually paying it off way ahead of the loan term. Recently, I’ve decided that I may want to move to another home.

Does it make sense to continue to put aside additional funds to pay down the mortgage, or should I take that money and invest it until I move? In this situation, won’t the additional funds that go toward principal simply be returned to me when I sell it? Your help is appreciated.

— Mark Moves

Dear Mark,
As someone who recently moved, I’d suggest that you put your extra money into savings, not your mortgage, while waiting to sell your current home. Building a war chest apart from the equity in your home will increase your financial flexibility. That’s important because there are tons of things to spend your money on when acquiring a new home. I just spent a fair amount on moving costs and new furniture.

I wouldn’t suggest investing in the financial markets with this money. Ideally, you’re talking about months, not years, before you’ll move into your new residence. What’s the point of taking on risk to principal in an investment with such a short term?

Having your house paid off prior to retirement is a sound financial goal. Don’t be so aggressive in paying down the mortgage, however, that you don’t leave yourself any discretionary room in your monthly spending for a little living, too. Good luck in selling your existing home and in your move to a new one.

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