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When do most pay off their mortgage?

 
 
wbogen@sbcglobal.net
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      01-19-2007, 07:26 PM
When discussing our finances, my wife often tells me "Most people our
age have already paid off their mortgage!" I am 55 and she is....
younger than that. We moved from one house but kept it as a rental
property and now have two 15 year mortgages, due to payoff in about 11
years. I have a feeling my wife is wrong, that most people around 55
are still paying off their house but I have no facts to support me.
I've tried looking at the US Census tables, asking realtors, etc. I'd
love to see a table showing age of owners versus fraction that own
their homes free&clear. Can anyone provide a source for this info, if
such exists?

 
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kastnna
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      01-19-2007, 07:59 PM
You and the "average people your age" are apples and oranges. Most
people don't keep their first house as an investment. They 1031
exchange the equity from the first house into the second. All things
being equal, many people only pay for one house in their lifetime. You
are paying for two.

Look at it this way, if you sold the rental today and put the money
towards your home mortgage you could shave a number of years off of
your payment schedule (unless of course there is a large price
dicrepancy in rental and residential). That may put you more in-line
with "average people your age".

Feel confident in your decision; you seem to be doing okay. You'll have
twice the equity 11 years from now too!

 
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Todd H.
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      01-19-2007, 10:19 PM
"(E-Mail Removed)" <(E-Mail Removed)> writes:

> When discussing our finances, my wife often tells me "Most people our
> age have already paid off their mortgage!" I am 55


Here's how I'd handle that:
"Oh yeah? Name 5. And no fair counting the Gumps and their
double wide. And of those, how many own a rental property?"

> and she is.... younger than that. We moved from one house but kept
> it as a rental property and now have two 15 year mortgages, due to
> payoff in about 11 years. I have a feeling my wife is wrong, that
> most people around 55 are still paying off their house but I have no
> facts to support me. I've tried looking at the US Census tables,
> asking realtors, etc. I'd love to see a table showing age of owners
> versus fraction that own their homes free&clear. Can anyone provide
> a source for this info, if such exists?


That would be an interesting table. For shits and giggles though, do
you have enough equity in the rental to pay off your current mortgage?
If so then the answer would be "we could pay off our mortgage, but
we'd have to sell our rental property/income generator and pay a hell
of a lot more money to the IRS. Would that make you feel better?"


--
Todd H.
http://toddh.net/

 
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Will Trice
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      01-20-2007, 12:12 AM


(E-Mail Removed) wrote:
> When discussing our finances, my wife often tells me "Most people our
> age have already paid off their mortgage!" I am 55 and she is....
> younger than that.


> Can anyone provide a source for this info, if
> such exists?


January 2007 Money magazine has this data for upper middle income
(defined as 60th to 79.9th percentile of income) and upper income (80th
to 89.9th percentile) households. For the age group of 45-54, 84.7% of
upper middle income households own a home with a mortgage, and 85.1% of
upper income households. For the age group of 55-64, it's 62.2% of
upper middle income households and 64.3% of upper income households.
The article cites the Federal Reserve Survey of Consumer Finances, 2004
(http://www.federalreserve.gov/pubs/o...f2004home.html) as
the source of this data if you want more details. The next survey will
be in 2007.

-Will

 
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joeu2004@hotmail.com
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      01-20-2007, 09:48 AM
(E-Mail Removed) wrote:
> When discussing our finances, my wife often tells me "Most people our
> age have already paid off their mortgage!" [....] I'd
> love to see a table showing age of owners versus fraction that own
> their homes free&clear. Can anyone provide a source for this info, if
> such exists?


Even if the information exists, it is irrelevant. All that matters is
the
particulars of your situation -- which may or may not be similar to
"most people" your age anyway. The question you should be asking
is: what criteria should you consider in deciding whether or not to
pay
off your mortgage(s)?

The best answer for __you__ would come from a qualified financial
adviser. But to get some insight, do a google search for "when to
pay off mortgage" (without the quotes).

 
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wbogen@sbcglobal.net
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      01-20-2007, 09:48 AM
Will Trice wrote:
> (E-Mail Removed) wrote:
> > When discussing our finances, my wife often tells me "Most people our
> > age have already paid off their mortgage!" I am 55 and she is....
> > younger than that.

>
> > Can anyone provide a source for this info, if
> > such exists?

>
> January 2007 Money magazine has this data for upper middle income
> (defined as 60th to 79.9th percentile of income) and upper income (80th
> to 89.9th percentile) households. For the age group of 45-54, 84.7% of
> upper middle income households own a home with a mortgage, and 85.1% of
> upper income households. For the age group of 55-64, it's 62.2% of
> upper middle income households and 64.3% of upper income households.
> The article cites the Federal Reserve Survey of Consumer Finances, 2004
> (http://www.federalreserve.gov/pubs/o...f2004home.html) as
> the source of this data if you want more details. The next survey will
> be in 2007.
>
> -Will


Great! Thanks for the info.

- Bill

 
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HW \Skip\ Weldon
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      01-20-2007, 02:02 PM
On Fri, 19 Jan 2007 18:12:22 -0600, Will Trice
<(E-Mail Removed)> wrote:


>January 2007 Money magazine has this data for upper middle income
>(defined as 60th to 79.9th percentile of income) and upper income (80th
>to 89.9th percentile) households. For the age group of 45-54, 84.7% of
>upper middle income households own a home with a mortgage, and 85.1% of
>upper income households. For the age group of 55-64, it's 62.2% of
>upper middle income households and 64.3% of upper income households.



Based purely on my own observations - and admittedly I do not see a
cross section of America - I suspect we'd find more telling
information in studies that relate net worth to those in debt at
various ages.

If there were such a study I suspect we'd see little difference at
younger ages - under 45 - but above that a strong correlation to
increasingly higher net worths where there was no indebtedness.

As to the issue of what most folks do, I further suspect that the
majority of people are in debt at all ages up into their 60s - which
suggests why true financial security up to that point is relatively
rare.

At any rate, my sense is that there are an awful lot of six figure
incomes who spend every dime they earn, and then some.


-HW "Skip" Weldon
Columbia, SC

 
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joetaxpayer
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      01-20-2007, 02:37 PM


(E-Mail Removed) wrote:
> (E-Mail Removed) wrote:
>
>>When discussing our finances, my wife often tells me "Most people our
>>age have already paid off their mortgage!" [....] I'd
>>love to see a table showing age of owners versus fraction that own
>>their homes free&clear. Can anyone provide a source for this info, if
>>such exists?

>
>
> Even if the information exists, it is irrelevant. All that matters is
> the
> particulars of your situation -- which may or may not be similar to
> "most people" your age anyway.


Amen to that. I posted a link to Scott Burns discussion of whether to
pay one's mortgage by retirement, http://tinyurl.com/yctt85 is a link to
that page. You may very well be in that group for whom the mortgage at
retirement isn't an issue, but that's not even the question, is it? At
55, if you plan to retire at 62, you will have only four years left on
two mortgages. By that point, the larger portion of the payments are to
principal and you could make the case that the rental income is covering
the interest on both.

Back to your question - intuitively, I'd tell you wife 'no'. Most people
are not financially savvy, most did not buy their first home at 25 or
younger on a 30 year mortgage, with no refinancing, nor did most 40 year
olds get their final mortgage as a 15 year. My observation is that in
this last cycle (of low rates) the smart ones all refinanced to 15yr, 5%
fixed, and the unfortunate souls pulled out equity to pay credit cards,
taking the wonderful ARMs that allowed payments based on 1%, and those
mortgages have been blowing up for the past year.

In sum, the majority should have zero mortgage by retirement, but most
don't, and still fewer have no mortgage at 55. My gut says your
situation puts you in the top 20% if the data existed that way.
JOE

 
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Lon
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      01-20-2007, 08:57 PM
I don't think there is any magical time to pay off a mortgage as long
as the mortgage is affordable and does not impede being able to do
other thing that the mortgage payments would allow. I had a goal to pay
off my mortage when I turned 58 and was ready to retire. I did that and
it was my fourth home. I am now 72 years of age and own two homes
mortgage free, one in New Zealand and the other in California. We spend
six months of the year at each home and have been doing so for 15
years. I was fortunate to be able to sell one large home for a nice
profit at age 58 and buy two smaller homes paying cash.

On Jan 20, 8:26 am, "(E-Mail Removed)" <(E-Mail Removed)>
wrote:
> When discussing our finances, my wife often tells me "Most people our
> age have already paid off their mortgage!" I am 55 and she is....
> younger than that. We moved from one house but kept it as a rental
> property and now have two 15 year mortgages, due to payoff in about 11
> years. I have a feeling my wife is wrong, that most people around 55
> are still paying off their house but I have no facts to support me.
> I've tried looking at the US Census tables, asking realtors, etc. I'd
> love to see a table showing age of owners versus fraction that own
> their homes free&clear. Can anyone provide a source for this info, if
> such exists?


 
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Logan Shaw
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      01-20-2007, 09:47 PM
(E-Mail Removed) wrote:
> When discussing our finances, my wife often tells me "Most people our
> age have already paid off their mortgage!" I am 55 and she is....
> younger than that. We moved from one house but kept it as a rental
> property and now have two 15 year mortgages, due to payoff in about 11
> years. I have a feeling my wife is wrong, that most people around 55
> are still paying off their house but I have no facts to support me.


It seems to me that there are two issues here:

(1) Whether it is the smart thing to do to pay off the mortgage
or keep paying on it.
(2) Your wife's comfort level with having a mortgage. Or with
having a rental property.

Maybe it would help to understand why your wife feels it's important
to have paid off the mortgage. Maybe debt makes her uncomfortable,
like it does me. (It took me a long time to admit that there is such
a thing as good debt.) Or it could be a lot of other things along
those lines.

- Logan

 
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