Why Do Older People Still Have Mortgages?

This article talks about older people who have to give up their homes as a result of the recession. (Hat tip: John J. Ray) The article begins by talking about one Roy Johnson in Georgia who had to give up his home because he couldn’t afford the $1000 per month mortgage payment. He is 79 and has owned his house since 1963.

There is no way he was paying $1000 on his mortgage when he first got it in 1963 (it was probably more like $100). In fact, there is no way he should even still have a mortgage if he first got his house in 1963. It should have been paid off by now; it would have been paid off in 1993, if it was a 30-year mortgage. At that time, he would have been 60, which is a decent age to finish paying off your mortgage. The point is that after you retire, you shouldn't count on the big bucks that will help pay a mortgage. No, obviously he refinanced for one reason or another, and then got into trouble, but I can’t think of why it would be a good idea to have a mortgage after you retire. My wife’s aunt and uncle still have a mortgage, even though they are in their eighties and bought their house in 1964. I think they’re crazy.

Anyway, these examples show the inadequacy of financial education in our schools.

Comments

[Loans Canada]

Wow, I totally agree with you.

People should be planning their retirement more responsibly than they are. A mortgage hurts, and it hurts even more if you're retired and get little income.

Refinancing, second mortgages, they're often provided at higher rates than first mortgages. Imagine an older fellow trying to pay back a high interest second mortgage. Just terrible!

On my site I actually created a mortgage learning center to teach people how to deal with their debt (http://loanscanada.ca/mortgages/). Check it out.

[John Pepple]

Thanks for the link. After I posted, I learned about a friend's brother who is planning his fourth refinancing. He is the type who should definitely check out your mortgage refinancing center, but he is stubborn and probably won't.

[american home mortgage servicing]

Great information in this post! I never knew this topic was questioned until I read this post. I agree with you completely when you write that there is no reason to have a mortgage after you retire. I hope I wont have to face the same troubles as Mr. Johnson.