A greater proportion of homeowners over 65 are carrying mortgage debt compared with past generations, and the burden is making it harder for them to hold on to their homes. About 30 percent of all homeowners aged 70 and older are facing mortgage payments according to the Consumer Financial Protection Bureau. In 2001, just eight percent of owners aged 75 or older faced mortgage debt, according to the Federal Reserve’s 2010 Survey of Consumer Finances.
The increase in the proportion of retirees holding mortgage debt is significant because the retiree population is growing steadily and will increase by 11 million over the next decade, Eric Belsky, of Harvard University’s Joint Center for Housing Studies, said at a recent forum, the New York Times reported.
A likely outcome of this trend is a spike in demand for reverse mortgages, which allows homeowners 62 and older to borrow money using their home equity as collateral, according to the newspaper. The funds have to be used to pay off the mortgage, which gives these homeowners relief from monthly payments. The loan is repaid to the bank once the borrower moves or dies. [NYT] – Hiten Samtani