Over 10 million people across the United States aged 65 and older are still paying off their home mortgages, even into retirement years, a new report from Lending Tree indicates.
Lending Tree, an online loan marketplace for mortgages, small businesses, and other loans, analyzed the latest U.S. Census Bureau data to review the share of homeowners 65 and older who still have mortgages throughout the country’s 50 largest metro areas.
What they found was that 19 percent of those in the 65-plus age bracket are continuing to make monthly mortgage payments and that homes owned by this group tend to be less valuable than those owned by the general population.
San Diego, Miami, and Las Vegas led the way with the largest share of 65-and-over homeowners with a mortgage.
Almost 24 percent of homeowners in these areas are still paying off mortgage debt.
Conversely, Salt Lake City, Austin, and Dallas had the smallest share of the 65-plus crowd owing money on their homes.
Just shy of 14 percent of them still have mortgages.
In San Diego alone, over 24 percent of the over-65 homeowners continue to pay their mortgage on a home with a median value of $698,000.
That compares with a median value of $722,200 for homeowners of all ages.
However, median housing costs for the senior groups tend to be lower, at $2,281 per month as opposed to $2,735 housing costs for all others.
Taking a look at Miami, 23.52 percent of 65-plus homeowners hold a mortgage, with a median home value of $334,300 and median household costs of $1,682.
The median value rises to $362,500 for all area homeowners, with median housing costs of $2,005.
In its 2021 National Movers Study, United Van Lines named Florida as the top retirement state with 39 percent of its clients heading to the Sunshine State.
South Carolina was next with 37 percent, followed by Arizona at 36 percent, Delaware at 34 percent, and Idaho at 29 percent.
“While it’s really no surprise that Florida, the Carolinas, and Arizona are popular choices for retirees, it’s also significant that the Northeastern United States is experiencing an unprecedented exodus of over-55s” the report stated. “There is a clear migration pattern away from expensive real estate, higher taxes, and crowds. For retirees, maintaining their standard of living means moving to where that’s possible.”
Nancy Meserole, manager at A.S.A.P. Mortgage Inc.’s Croton-on-Hudson, New York, branch notes that many of her clients are 65 and older.
A.S.A.P. has several offices in New York, as well as in Florida.
“We see this all the time,” Meserole noted.
“Age has no bearing on someone getting a mortgage. Even if someone is 90 years old and qualifies, he or she will get the mortgage.”
Some of her clients in this age range are reselling their homes and upgrading, while some others are first-time homebuyers.
“People could have been renting their entire life and with rents rising so high now, they may just be tired of dealing with continuous hikes and decide to buy something,” she said.
“Plus, 65 is fairly young these days. Many people are still working full time well into their 70s.”
Meserole said some are staying in the area, while others are opting to move south, where home prices are far less expensive than in the New York metro area.
Other seniors are opting for a reverse mortgage that provides them with needed income based on the current value of their homes.
Reverse mortgages are available to anyone aged 62 or older.
“For example, if your home has an appraised value of $1 million and you owe $200,000 on it, you may be able to borrow up to $500,000,” Meserole explained.
Typically, the lender might use the $200,000 of the borrowed amount to pay off the remaining mortgage.
The homeowner would then be able to use the $300,000 towards their living expenses, medical bills, necessary improvements, etc.
“The only stipulation is that they must meet with a housing counselor before getting approval on the reverse mortgage.”
While interest accrues on the borrowed amount, the homeowner is not responsible for monthly payments.
The monies are paid back when the house is sold—either by the homeowner or his or her estate.
“The only downside of a reverse mortgage is if the home doesn’t appreciate as planned. Then the homeowner could possibly owe more than the home is worth when it comes time to sell,” added Meserole.
Pamela Kwiatkowski, Chief Insurance Officer at Goose Insurance Company, believes that this new trend of older mortgage holders could have an effect on generational wealth.
“If they’re stuck with mortgage payments as they age, that could mean they’ll have less wealth to transfer to their children,” she said.
“It’s also not surprising that many seniors in areas with a higher cost of living are still paying off their homes.”
The fact that many seniors today are living healthier lifestyles allows them to still have access to life insurance that can provide some assistance to their children, should they pass on while still owing mortgage payments.
“While they can certainly obtain mortgage insurance to insure the remaining debt on a mortgage, the face amount of that insurance payout can go down when the mortgage debt goes down,” Kwiatkowski explained.
“If the homeowner opts for an individual life insurance policy instead, the beneficiary will collect all of the proceeds and can either use the money to pay off the mortgage or continue the monthly payments until the property is sold.”
Kwiatkowski said many of their customers are seniors with mortgages who are looking for a way to protect their assets and also ensure generational wealth for their children.
Typically, life insurance becomes more expensive to obtain as you age.
“Most people tend to wait until something triggers them to take action, but we believe it’s far better to be proactive, than reactive,” she said.