Retirees contending with mortgage debt
By National Underwriter
By Michael K. Stanley
Millions of Americans are dragging their mortgage debt with them into retirement according to recent research from LIMRA and an AARP Public Policy Institute Study.
The added burden of a mortgage further complicates an already treacherous retirement environment for many due to the reverberating consequences of the global financial crisis.
LIMRA found that in 1989 the prevalence of mortgage debt for Americans age 65 to 74 was 22 percent. By 2010, that figure nearly doubled to 41 percent. And, due to depressed (albeit slowly rebounding home values) the amount of debt Americans hold on their homes has also grown.
LIMRA concluded that the median value of mortgage debt for people ages 65 to 74 was $70,000 in 2010 compared to $15,000 in 1989.
Although rising property taxes have also contributed to the debt, besides the financial crisis or perhaps more aptly, because of the financial crisis, many Americans are using home equity loans to fund health care and other expenses.
Although, traditionally, many older Americans downsize and sell their home in retirement, recent studies show that many older Americans are using home equity loans to fund expenses in retirement. And with declining home values, equity becomes reduced and seniors have trouble funding their emergency needs.
Although holding a mortgage allows for interest rate tax deduction, the portion of the mortgage payment that is applied to interest declines as the final payment approaches.
Originally published on LifeHealthPro.com