Mortgage debt is in on the rise for older homeowners. A recent article on the Equifax Finance blog, “Older Americans Facing Increased Mortgage Debt,” shares some statistics about this startling trend and what those nearing retirement can do to avoid it.
Approximately 33 million Americans over the age of 65 own their homes, making them the age group with the highest homeownership rate, but according to the Consumer Financial Protection Bureau (CFPB), homeownership is becoming a burden for many in that group. The percentage of homeowners over the age of 65 with mortgage debt grew by 8 percent from 2001 to 2011. The amount owed also grew from $43,400 to $79,000. For consumers over age 75, mortgage debt increased to 21.2 percent. Default rates have also increased five times, and foreclosure can be an especially difficult process for older Americans who may also be suffering physical and/or mental ailments.
What many of us view as a source of stability in our older years is instead putting older Americans at risk. Too-high mortgage payments are compromising the financial security of older Americans, keeping them in the workforce longer and decreasing seniors’ net worth.
Because of their low income, seniors may not be able to qualify for a loan modification.
For those approaching retirement and wanting to avoid a mortgage during that time, follow these three tips from the CFPB:
- Make mortgage pay-off part of your retirement plan; plan to pay off your mortgage before you retire so you won’t have to worry about mortgage payments during retirement.
- Be cautious with loan modifications – pay attention to terms. Avoid tapping into your home equity now so it’ll be there if you ever really need it during retirement.
- Create a realistic budget that includes a reduced income, increased healthcare costs and home modifications.
Read the full article on the Equifax Finance blog, where you can find more information on retirement and mortgages, as well as personal savings and a host of other personal finance topics, from taxes to credit to identity theft protection.