Many people today wait until later in life to tackle the challenge of homeownership. Getting out from under student debt takes time, and potential homeowners are working hard to ensure they have the funds to cover their monthly payments. As a result, people are often continuing to make mortgage payments into their 60s – and even past retirement. Here are some tips to shorten your mortgage if you are thinking of homeownership later in life.
Mortgages Then and Now
Back in the 1920s, the average homeowner paid about 40% down and made the remaining payments over the course of only 10 years. People in those days didn’t live as long as they do today, so these terms allowed for what was then considered to be affordable homeownership. It allowed people to spend the first couple decades of their adult lives saving for the down payment, and then paying off their homes quickly. This was ideal at the time and worked well for many people.
Over times, things changed. These days, the most common mortgages require 30-year terms, and while lenders recommend 20% down payments, most people put down about 5%. For people who are now living longer, and with the average age of retirement being about 65, more people than ever before are entering their retirement years with a mortgage balance still over their heads. This can be problematic.