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The LendingTree report used U.S. Census Bureau data to look at the share of homeowners who are 65 and older and still have a mortgage in each of the nation’s 50 largest metropolitan areas. The company found that being able to pay off your mortgage before retirement is still difficult for 19% of homeowners in that age group.
So, how are these folks still able to keep up with their mortgage payments after retiring? Is it easy to convince someone approaching retirement to take on a mortgage later on in life?
In the 50 largest metros nationwide, older homeowners’ homes are worth an average of $10,626 less than homes owned by the general population, according to the report. That means payments aren't necessarily as large as that for younger homeowners. LendingTree does note value varies by metro, and there are a few areas where homes owned by older people are worth more than those owned by the overall population.
Additionally, as homeowners age, housing-related costs tend to decline. The company found that the average total monthly housing cost for homeowners age 65 and older is $268 less compared to the general population.
As folks age, the idea of taking out a new mortgage can be worrisome. For the most part, many people are afraid of paying off their loans into their late 60s and beyond. They may also worry about being able to keep up with their mortgage payments after they retire, before being able to finish up payments on their loan.
That being said, LendingTree reports that people approaching the retirement age tend to be in a better position to handle debt than their younger counterparts. The report also revealed that older Americans have stronger credit scores and more cash on hand that can be used for down payments on a home, should they need it. These factors usually allow older Americans to secure a better rate on their homes and smaller monthly payments that make it more manageable to pay off a loan in their older years.
For brokers looking to market to an older demographic, it may be easier to convince them of their capability to afford a new home than you think. Some of the options that can be presented to older borrowers include reverse mortgages or varying types of retirement mortgages offered by agencies such as Fannie Mae, Freddie Mac, FHA, VA, and USDA loan programs.
A retirement mortgage is defined as loans for retired borrowers that don't require proof of a job or standard income documents, such as paystubs or W-2s, according to LendingTree. They also do not require an age limit for a loan, whereas a reverse mortgage requires folks to be at least 62 years old.