Many American homeowners are paying off their mortgage into retirement
Of retiree homeowners, almost one third estimate it will take them over eight years to pay off their debt.
A recent study examining mortgages and homeownership trends among retirees across the United States found a substantial proportion must continue to make loan repayments, despite their lack of salary income.
The American Financing team’s Retirement and Mortgages Survey reveals that among Americans aged 60-70 years old, more than two fifths (44%) are forced to bring their mortgage into retirement with them.
These results support Fannie Mae’s recent Housing Insights research findings, which found that Baby Boomers who’ve reached retirement age are likelier to possess mortgage debt than previous generations. Boomers aged 65-69 in 2015, were 10% less likely to own their homes than pre-Boomer homeowners of the same age in 2000.
Of these homeowners with outstanding debt, almost one third (32%) estimate that it will take them over eight years to fully service their loan commitments, while more than one in ten (17%) say they may never pay it off.
Almost two thirds (64%) of 60-70 year old retiree homeowners plan to remain in their current home. Of these, a similar proportion (62%) plan to leave this home to their children or estate. Almost three quarters (71%) of these retiree homeowners would rather make renovations than move in the event of a mobility health issue.
The majority (63%) of survey respondents were confident their savings would cover any necessary home renovations or modifications. However, nearly half (48%) would be rattled if their retirement savings dried up.
Contrary to these findings, a study published in October found Baby Boomers were keen on early retirement, wanting to downsize but with a multi-car garage, open-plan living and a place close to their grandchildren.
More than half of those surveyed (58%) said they have refinanced their home loan at some point. Of these, almost three quarters (72%) have done so to lower their interest rate. Reverse mortgages are another option, however, one in five (19%) retirees don’t know what they are and even fewer (15%) would consider using one.
American Financing estimates that many retirees will continue to bear the burden of debt well into their 70s.
If you’re concerned about having enough to retire, you’re not alone. A finder study released earlier this year revealed that around 45 million American adults (18% of the population) believe they’ll never stop working.
Home loan refinances by millennials recently reached a new multi-month peak, indicating current mortgage rates are attractive to those looking to save money or make their monthly housing payments more affordable. Millennials may also be influencing other housing trends, too, like the increasing popularity of mortgages from nontraditional sources. The majority of the United States’ top 10 home lenders are no longer banks.