Nearly 10 million homeowners aged 65 and over are still struggling with mortgage debt

Mortgages are the biggest debt held by many Americans, but paying them off before they reach retirement age is not possible for everyone. In fact, across the country, nearly 10 million homeowners who are still paying off their mortgages are 65 and over.

To better understand where homeowners are likely to pay off their mortgages once they approach or pass retirement age, Jacob Channel, senior economic analyst at LendingTree, used data from the Census Bureau to examine the share of homeowners. age 65 and over and still have a mortgage in each of the country’s 50 largest metropolitan areas.

Channel found that in these subways, an average of almost 19% of homeowners aged 65 and over are struggling with a mortgage. The report also found that homes owned by people in this age range tend to be less valuable than those owned by the general population – and their monthly housing costs tend to be lower.

Here are some of the main findings of the study:

The largest share of homeowners aged 65 and over with a mortgage is concentrated in Miami, Los Angeles and Sacramento, California. In these three subways, almost a quarter on average – 23.64% – of homeowners aged 65 and over have a mortgage. That’s about five percentage points higher than the 50 metro average of 18.91%.

Three subways in Texas – Houston, Austin and Dallas – have the smallest proportion of homeowners with mortgages who are at least 65 years of age. On average, only 13.71% of homeowners 65 and over have a mortgage in these subways.

Typically, homes owned by people 65 and over are worth less than homes owned by the general population.

In the country’s 50 largest metros, senior homeowners’ homes are worth an average of $ 10,626 less than homes owned by the general population. That being said, the disparity in value varies by metro, and there are a handful of areas where homes owned by older people are worth more than homes owned by the general population.

Even though they are still paying off their mortgage, older homeowners generally have lower housing costs. In the country’s 50 largest metros, the average total monthly housing costs for homeowners 65 and over with a mortgage are $ 268 lower than for the general population.

“Because the conventional wisdom is that a person should pay off their mortgage before reaching retirement age, I was initially surprised at how many people in their 60s and over still had a mortgage. “Channel said. “But when I started to take a closer look at the numbers and think about how expensive housing has become and how many people just can’t afford a house until later in life, the numbers started to grow. make a lot of sense. “

He said there are several reasons older homeowners tend to have lower housing costs. Here are three big ones:

“First, as we get older people are more likely to downsize and move into smaller, cheaper homes,” Channel explained. “While there are a few exceptions based on factors such as their interest rate, down payment, and length of mortgage, homeowners who own these cheaper homes tend to have lower payments than those who do. ‘a bigger house. “

He added that older homeowners tend to have stronger financial profiles and better credit scores than younger homeowners, which means they can benefit from lower rates, resulting in lower monthly payments.

The last reason stems from how mortgages work. “Assuming they have a fixed rate mortgage and don’t refinance or modify their loan, a homeowner’s mortgage payment is unlikely to increase or decrease significantly throughout their lifetime.” , Channel said. “It can go up or down with increases and decreases in things like taxes and insurance, but the principal and interest that a homeowner pays will remain constant. This is true even if the value of the mortgaged home increases.

For this reason, older homeowners who bought their homes years ago with smaller loans reflecting falling house prices will usually end up paying less than what a younger, newer buyer would, because newer buyers get larger loans which reflect higher prices. , Channel explained.

Nationally, just over 15 million homeowners aged 55 to 74 do not have a mortgage, compared to about 17.7 million who do. By comparison, about 9.6 million homeowners aged 65 and over have a mortgage, while over 16 million (16,184,634) do not.

“Based on these numbers, it’s clear that a majority of baby boomers still have a mortgage,” Channel said. “However, as they continue to pay off their loans over the next decade, baby boomers with mortgages are likely to become the minority.”

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