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Other side of the coin for some retired folks. Relatives of ours. Bought their home new back in the 70's and paid off the mortgage several years ago and they own it free and clear. Their home is now 40 plus years old and and is literally falling apart.
They have spent most of their savings repairing the place. It was a cheaply built tract house that just barely met the building codes of the time. Latest problem is with the plumbing. It has been slowly leaking in multiple places and the entire system has to be replaced including tearing out drywall to access the pipes.
Anyone following the traditional life pattern of just paying on the mortgage until it's paid off will not be part of the subset of seniors who "are being buried by housing debt". The couple in your example refinanced "partly to pay down credit-card debt", which is incredibly stupid. How did they develop excessive credit-card debt in the first place? In all likelihood by being totally undisciplined in their spending. No sympathy for them here; they made their bed so now they must lie in it. On what grounds are they fighting foreclosure in court, I wonder? If you stop paying on your mortgage, well then sure you will be foreclosed on. What did they expect?
But then you have all these supposed "financial advisers" (who usually also sell debt products or have good buddies who do) constantly coming onto the average Joe Sixpack making them feel like a dufus if they don't "leverage."
Yeah, leverage was great during the long secular rise from WW2 to the turn of this century. That is over and ongoing "guaranteed growth" is gone. It will really go to hades when the inflection point in the subpopulation with significant investable assets peaks about 15 years from now.
It will no longer be possible to use leverage to buy one then another property and in general debt will be highly dangerous for most people (perhaps it already is).
All this is true but there are other scenarios where people have paid for houses and those houses eventually need repair and up keep and often retirement income hasn't kept up with rising costs. Consider the many stories of elderly seniors on SS who can no longer afford their rising property taxes as their older long since paid for homes went up in assessments etc. It is a story told over and over. Renters can be in place for years and as the current increased demand for rental units drives costs up they are unable to stay ahead. Consider the public pension recipients who are finding their pensions changing with COLA going away etc etc. Seniors on fixed incomes only are at the mercy of those sources for any increases in income over what can be thirty or more years. Yes within the big picture there are those to lack sympathy for but that big picture is very broad with many scenarios. Regardless of reason why it is a societal problem begging to be addressed. It is one thing to say let welfare mothers suffer but does society want to see a boat load of 80 year old destitute great grandmothers in our streets or worse? As Snowtired14 has noted above you can personally do nothing wrong and do everything right and still be adversely impacted by the faulty behavior of others and many are paying the price for others financial situations.
People like you've described, even though their house was paid off, had more house then they could afford. This is why most people should downsize and should strongly consider moving to a less expensive area if at all possible, before getting too old.
Other side of the coin for some retired folks. Relatives of ours. Bought their home new back in the 70's and paid off the mortgage several years ago and they own it free and clear. Their home is now 40 plus years old and and is literally falling apart.
They have spent most of their savings repairing the place. It was a cheaply built tract house that just barely met the building codes of the time. Latest problem is with the plumbing. It has been slowly leaking in multiple places and the entire system has to be replaced including tearing out drywall to access the pipes.
They have more house than they can afford.
Paying off the mortgage is but one element in housing costs.
Other side of the coin for some retired folks. Relatives of ours. Bought their home new back in the 70's and paid off the mortgage several years ago and they own it free and clear. Their home is now 40 plus years old and and is literally falling apart.
They have spent most of their savings repairing the place. It was a cheaply built tract house that just barely met the building codes of the time. Latest problem is with the plumbing. It has been slowly leaking in multiple places and the entire system has to be replaced including tearing out drywall to access the pipes.
This is the potential future for many Boomers and is a potential crisis.
The Consumer Financial Protection Bureau's Office for Older Americans says 30 percent of homeowners 65 and older (6.5 million people) were paying a mortgage in 2013, up from 22 percent in 2001. Federal Reserve numbers show the share of people 75 and older carrying home loans jumped from 8 percent in 2001 to 21 percent in 2011.
What's more, the median mortgage held by Americans 65 and older has more than doubled since 2001 — to $88,000 from $43,400, the financial protection bureau says.
I can't believe people that are retired think it is wise to live in a house and still continue to make payments on it. IMHO, if you haven't payed it off by the time you retire, its time to downsize. Honestly, you should have probably paid it off a long time ago. Maybe you bought too much house?
I can't believe people that are retired think it is wise to live in a house and still continue to make payments on it. IMHO, if you haven't payed it off by the time you retire, its time to downsize. Honestly, you should have probably paid it off a long time ago. Maybe you bought too much house?
This can be a tad misleading as some of the mortgages are for second homes and folks often have enough liquid assets to pay it off. We have seen a few years of low mortgage rates and high investment returns. Some bought their retirement prior to retirement and will sell their primary when they do. They can pay off the mortgage for their retirement home with the proceeds from the sale of their former primary home. They wanted to take advantage of market bottom fire sales especially in coastal areas etc.
It's not something that happens immediately. Over time you see your costs increase.
If you don't have the money then it's time to sell. Rent instead.
Rental rates are skyrocketing in many parts of the country and many areas have a rental shortage and crisis.
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