New data shows that more Americans are going into retirement with mortgage debt. Is this a problem, and what does it mean for today’s Boston condominium owners?
According to a recent article in Bloomberg, mortgages that stretch later into life are becoming more common, particularly as Millennials wait longer to purchase a Boston condo. “A lot of today’s Millennials are entering the market quite a bit later than their parents, so just by definition, they’re going to be carrying more debt later in life,” said Sam Khater, deputy chief economist at CoreLogic.
They also may be modeling their parents’ behavior. According to the Harvard Joint Center for Housing Studies, 41% of Americans over the age of 65 carry mortgage debt. This trend is entirely new. For most of homeownership history, people tended to buy houses young – in their 20s or early 30s – and if they did buy a second home, they did it before they were 40. Paying off a 30-year mortgage was the main goal of working life. In 1995, just 22% of homeowners 65 and older carried mortgage debt.
Mortgage Debts Are Around Longer
Things have changed. Though owing on a mortgage can be a problem for some seniors — those who no longer have a source of income and do not have significant retirement savings set aside — for many older homeowners, it’s simply a matter of convenience to hold a mortgage later in life.
A recent article in the New York Times underlines this fact. For example, one couple in their early 70s took out a 30-year mortgage to finance a new home. They did this despite having just sold a home that they owned outright. The reasoning was to put the extra cash into savings for retirement, make improvements that would make the new home more livable as they aged, and make the mortgage payment with their pension payments.
People are living longer, and looking at retirement as simply the next stage in their adult lives — not a short road to the grave. The rise in debt for those 65 and older may simply reflect a change in lifestyle. Seniors may be asking themselves why they would tie up all their resources in a piece of real estate, when they could be using those funds to enjoy their retirement. Unfortunately, it also means there is a lower priority in general to leave an inheritance for those that follow after, but that would be a discussion for a different article.
Retire in a Different Housing Market
Nearing retirement age often means that a change in housing is necessary. The kids are grown, and it no longer makes sense to take care of a house with four bedrooms. Many retirees will also find that moving to a new city makes sense.
Ready to purchase your retirement Boston Beacon Hill condo? There are mortgage options available even for those who are no longer in the workforce. Work with the best and take advantage of early real estate market shifts — contact our top Boston real estate agents today.
Back Bay Boston condos for sale
Beacon Hill Boston condos for sale
Charlestown Boston condos for sale
Navy Yard Charlestown Boston condos
Dorchester Boston condos for sale
Fenway Boston condos for sale
Jamaica Plain Boston condos for sale
Leather District Boston condos for sale
Midtown/Downtown Boston condos for sale
Seaport District Boston condos for sale
South Boston condos for sale
South End Boston condos for sale
Waterfront condos for sale
North End condos for sale
West End condos for sale
East Boston condos for sale
Back Bay Boston condos
Beacon Hill Boston condos
Charlestown Boston condos
Navy Yard Charlestown Boston condos
Dorchester Boston condos
Fenway Boston condos
Jamaica Plain Boston condos
Leather District Boston condos
Midtown Boston condos
Seaport District Boston condos
South Boston new condos
South End new condos
Waterfront new condos
North End new condos
West End new condos
East Boston condos