I read a article in which it seems to say people at the age of 55-65 may not have paid off their house yet.
“The percentage of households headed by someone 75 or older that carried debt was 41.3%, compared with 78.5% of families headed by someone in the 55-64-year-old age range.”
Is it because they move to a new place but buy a house with financing (instead of buying it with cash) even when they are old?
When does an “average” middle-income person (say, with 50k to 100k annual income) buy his/her last house in his/her life still with a mortgage? I thought the average retirement age is between 60-65). If they retire before they pay off their mortgage and do not sufficient assets outside the equity accumulated in their house, is it a scary financial situation? How can they manage the mortgage payment if they do not have sufficient monthly income?
We are 57 and our house will be paid off in a few years. At this point we owe very little and could just pay it off now if we wanted to. We hope to downsize in retirement and do not plan to have a mortgage.
After you had sold the house at 57, did you buy a new one? If you buy a new house with a 30-year mortgage, will the last mortgage payment be when you are 87 years old? Most people at 87 yo may not have enough income stream to pay the mortgage, I think. Even with a 15-year mortgage, the last payment will be at 57+15=72 yo!
I wonder whether it is a wise move to buy a house with a sizable mortgage after 55 yo, even if you still have a job. However, I also heard that if the size of mortgage is too small (say, only 50-60k for a house costing 250k - in order to lower the monthly mortgage payment at an “older” age), the mortgage company may not be interested in lending you the money. (maybe too much “work” but too little accrued interests for the mortgage company.)
We sold our 25-yr family home in October 2012. We still had a mortgage on it, although the principal amount was not very large. The primary objective of selling and moving was to eliminate the need for the mortgage payments, as I wanted more flexibility with my work situation. We bought a house close to where we lived before, for all cash. Of course, we do have insurance and property taxes which are pretty much the same as before. Sometimes I wonder if we should have downsized still further and invested some cash. But I’m pretty happy with what we did.
I’m 66 and DH is 64, and we are “semi-retired.” I work about 1/4 time.
@Madison and FallGirl, I guess both of you have been doing better than the average. According to the following quote (again), I guess many in the 55-60 age group still have a long way to go before they pay off their mortgage.
“The percentage of households headed by someone 75 or older that carried debt was 41.3%, compared with 78.5% of families headed by someone in the 55-64-year-old age range.”
@VeryHappy, The original article does say that the main reason for the debt is due to the housing/mortgage.
(I do not know how to cut-and-paste both the link and one of the paragraphs in the linked article using my smartphone. So I arbitrarily choose to copy the paragraph.)
IMO, a mortgage is not “bad” debt, the way credit card debt is. The latter suggests out-of-control spending. The former suggests that you want a place to live and you’re building equity.
In our area, there are a lot of old people with mortgages as they can leverage the living situation well in a high COL, especially in housing costs. With interest rates as low as they are, and that they can have a favorable tax impact, it can make sense to have a place mortgaged. We have a 2% mortgage and it simply makes no sense to pay it off.
It is nice not having debt, but having a mortgage is not necessarily bad for retirees, it is bad only when they can’t comfortably make the monthly mortgage payments. For some retirees it makes more sense having extra money liquid in bank (or under mattress) and not locked up in home equity. For a 90 year old it might make sense to take out a new 30 year mortgage and party and stick it to mortgagee when they die.
p.s.: 55-65 year olds in Florida aren’t called ‘old people’…they are called ‘whippersnappers’.
Re: “For a 90 year old it might make sense to take out a new 30 year mortgage and party and stick it to mortgagee when they die.”
Who will lend a 90 year old a mortgage unless they still have a steady income? I think those with a good pension as well as social security income (and still have other investment to generate incone) are exceptions here.
But I heard that if a person puts almost all of their assets in his house and conservative safe deposits like CD may be income poor even though he may be assets reasonably rich.
The closer you get to that age range, the more you’ll realize that isn’t old.
I’m 46, and my mortgage will be paid off in ten years. Sooner, I suppose, if I wanted, but the interest rate is low and I have no particular reason to stash all my available cash in my mortgage when I can make my money earn more elsewhere. If the interest rate on my mortgage was high (like the 13-14% rate of the mid-1980s) then I’d feel vastly different.
I personally wouldn’t retire with a mortgage. Dh and I could, because our income in retirement will be quite high. But my personal approach to a mortgage is to not have one going into retirement. (I’m happier with no car payments and no credit card debt, but the mortgage doesn’t cause me similar angst.)
I am 57 and still have three years left on my first mortgage; however, I have a home equity loan which I used to pay some college costs and home repairs (not remodeling or updating, but actual repairs that were needed.) I inquired about refinancing twice and both times were told that the amount of my combined loans ($50-60K) was too small for them (the mortgage co) to consider. Once my first mortgage is paid off, I will accelerate the payment of the equity loan so that I will have no mortgage by the time I retire. I also have no car payment and no credit card debt now, and don’t plan to have any debt when I retire.
MCAT…you are totally wrong. A lending institution cannot deny a mortgage to someone who qualifies for one simply because of the applicants age. Sorry…but that is called age discrimination.
We know an 87 year old who got a 30 year fixed rate mortgage on a new home in Florida. He had a 50% downpayment.
And for the record…the estate had to deal with that mortgage balance when the person died. They sold the house, and paid the bills.
Can I ask…what do you really want to know in this thread?
And I totally agree with the poster upstream. Watch out who you call old. In my opinion, 55-65 is not old.
