1. Actually it does not matter how old or young you are, a 30 year fixed interest rate mortgage is always the mortgage of choice. A 30 year fixed rate home loan is the way to go for everybody. The loan provides security in knowing what your payment will be for as long as you are in the home and it gives you the opportunity to pay down on the home loan when you want too.
2. Many people that are 50, 60, 70, 80, and even 90 years old feel that the 30 year mortgage is not the way for them to go and that a 15 year fixed mortgage or a 10 year mortgage is going to be best suited for them. They all think this because they feel that at this point in their life they should have the mortgage paid off or at least be able to pay it off before they die. The banks probably enjoy hearing this but the banks cannot discriminate on your age and can do your loan. Its up to the bank to decide whether or not they want to do your loan. If you are up in age and probably are going to die before you would have paid off the loan it does not really matter. You will be able to find some mortgage company to do it. Many will do it and go ahead and then sell your home loan right after closing relieving them of any responsibility in case you die or foreclose on the property.
3. What older people need to ask themselves is why are you taking out a home loan now at a later age? If you are buying a new home than hopefully you have paid off the other home or have saved up enough money to put a considerable down payment on the new one. Maybe your buying a investment property or a second home. If you are doing one of these scenarios I hope you have enough money in the bank and are making a smart financial decision. You are probably on the down turn of your career or are living on a fixed income so you better know what your doing when your buying more real estate.
4. I’m going to say that you plan on refinancing your home and your taking cash out of the equity of the home. You could be taking the cash out for a number of reasons, home improvements, a vacation, college tuition, a boat, etc. What this transaction boils down to is that you did not have the money in the first place to buy whatever it is that you are financing. What you had to do is take the equity out of your home to do it. Let’s say you have lived in this home for 20 years and have 10 years left to pay on your original loan. Now you have taken a gigantic step back in trying to live the real American Dream in being debt free. If you have never had the house paid off yet, what makes you think your going to pay the house off in 10 or 15 years? Stop kidding yourself and just accept the fact that you will have a mortgage payment until the day you die. Its okay. You still get a tax write off on the interest you pay and you still own the home. At this time in your life its all about enjoying life not having to get stressed about making mortgage payments.
5. What you did not plan for over the years was needing money down the road. It really comes back to saving for these times. Sure, everybody has different circumstances in their lives and life happens. Do not go financing your retirement before making sure that you can afford what you are doing. Most people that are over 60 years old are living on a fixed income and have to stay on a tight budget. Plus, let’s say you only had 10 years left on your mortgage payment, it would be like you giving yourself a raise in 10 years with no mortgage payment.
6. The 30 year fixed interest rate mortgage is going to make the most sense for the elderly. If there is no other way of getting the cash you need besides tapping the equity in your home, than go ahead and do it. Just do not strap your self with the burden of a larger monthly mortgage payment. Take the 30 year loan and if you have the extra money laying around, just go ahead and write a bigger payment to the loan. You do not want to take a 10 or 15 year mortgage and find out you can’t handle the payments and refinance into a 30 year mortgage a year down the road and have to incur closing costs again.
7. Taking the 30 year fixed mortgage will let you put more money into your savings and retirement accounts. This is what is most important. You need to be putting away as much money as you can when you get closer to retirement. Actually, it does not matter what age you are, you need to be putting away as much as you can even if you are 20 years old. Hopefully you can get to the point where you have enough stashed away where you can live off of the interest your money is making.
8. The payments are going to be quite different on those mortgages. Let’s say you need a loan for $125k. The going interest rate for a 30, 15, and 10 are all the same (usually the 30 year is .25% higher than the 15 and 10) at 6% the day you start shopping for rates. A 30 year mortgage payment is $750, 15 year is $1,054, and a 10 year is $1,387. As you can see there is $1,387 – $750 = $637 a month difference in payments. For somebody who needs a $125k loan, $637 a month is a lot of money to be taking out of one’s pocket.
9. If you are worried that you will never have the house paid off do not do that to your self. Only 20% of all Americans ever will nowadays. With home prices still at a inflated price through out the country its getting harder and harder to do it especially with the way all of the other things we need to live are going up too. Gasoline, utilities, food, etc. have all gone up in price anywhere from 30% to 125% in price just in the last 5 years. Your better off not forcing yourself to pay down a mortgage and keeping the money to be able to survive. Since you get a tax write off on the interest you pay on the mortgage it does not really matter what mortgage rate you are paying.
10. When you are approaching the age of retirement you need to make sure you have all of your savings and retirement accounts fully funded. Take out the 30 year mortgage on any real estate transactions in the future. Do not worry about dying before its paid off. Make sure you have a will set up properly so when you do die your kids or family members have the option of keeping the same loan and the house if they want. If you set up your will correctly the bank can transfer their names onto the loan and they can start paying it because it was left in the will that way. The bank would prefer you do it this way so the house does not go into foreclosure. The bank just wants somebody to pay the loan. Regardless if your 50 years old, 60 years old, 70 years old, 80 years old, or 90 years old, the smartest play is the 30 year fixed rate mortgage.