A report by a Consumer Financial Protection Bureau claims that many senior citizens have carried a mortgage debt into their retirement phase. In fact, the current values are among the highest to be ever recorded. In the year 2001, retirees who still had to pay a mortgage were about 22%. This percentage rose to 30% in the year 2011. As for the remaining balance, in the year 2001, the average value was around $43,400, but now it has risen to $79,000.
What are the consequences of this? Retirees have to spend so much money on their monthly payments. Had their circumstances been different, they could have used this money for healthcare and other important expenses. The report claims that about 60% of nearly 4.5 million retired homeowners spend over 30% of their income on just their mortgage payment. If a comparison of the stats is made, it can be seen that retirees who have a mortgage have monthly expenses greater by $800, than those who do not. People without a mortgage spend around $434 in a month, and those with one, have to spend as much as $1,257.
A representative of the company, which prepared the report stated that most of the stats can be linked to the refinancing boom, which was witnessed in the year 2000. He added that there were other reasons as well such as the fact that people were opting to buy homes at a later stage in life, were not in favor of huge down payments and often had to borrow against the equity in their homes so that they could meet their other expenses.
The latest Census data claims that among those who are a homeowner, most of them are adults. For younger people, the percentage of homeownership has fallen down significantly. Why? Because these people are already burdened with student loans, have average paying jobs and so cannot afford a mortgage on top of their already high debt right now.
Another report, conducted by a college, puts some other interesting facts forward. Two third of people, whose age are above 64, are still working because they have to pay off a mortgage.
An industry expert advised that people should enter their retirement age debt free, but many senior citizens are acting against it, and making both their finances and health a burden for themselves.
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