Thursday, June 15, 2006
Older Americans Face More Mortgage Debt
Older Americans are carrying more mortgage debt now than they had in previous years, and they will carry even greater levels of debt in the future. The causes of this phenomenon are multiple. Americans get married later now, which pushes up the age when they buy their first houses. They also get divorced and remarried at greater rates, which results in selling (or at least leaving) their first house and perhaps buying another. Americans also have to shell out a larger portion of their income to buy a house than in previous generations, which not only increases the rate of overall mortgage debt but induces home buyers to opt for 30 year rather than, say, 15 year mortgages. This extends the period of debt well into their later years, as well as increasing their cumulative debt even more. Add to this the disconcerting general trend of increasing debt of all kinds, and it doesn't take a Nostradamus to foresee the vast majority of middle class Americans as debtors until the day they die. Mortgage debt is, in fact, exacerbated when homeowners take out second or even third mortgages to relieve their additional debts. The only leverage they have is the hope that the value of their homes will appreciate, enhancing equity that may later be translated into cash at some elusive point in their golden years. But if the real estate market crashes, and remains flat, that sole advantage is gone and millions of older Americans will be in a world of hurt.
"Mortgage Study - Americans Will Carry Mortgage Into Golden Years" from MortgageNewDaily