I’m 50 years old and thinking of buying a house. Should I avoid 30-year mortgages because I don’t know if I’ll be alive in 30 years?

Asked by Lynn

10 Answers

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Answered by Chad Freeman, Branch ManagerPRO+ in Bethesda, MD
Lynn:

That's a bit of a loaded question, but an essential one for someone in your situation. It really depends on your lifestyle, retirement plans, assets, and of course, health. I do think it is a broader question that should include your financial adviser and accountant, however here are a few tips from a mortgage professional...

A 30Y fixed will provide you the most stability and comfort. True, you may be paying more in interest, however depending on all of the factors above, this may be a good choice. Furthermore, though you may pay higher interest, you can generally deduct a higher amount from your taxes (talk to your qualified tax adviser).

A more aggressive loan such as an ARM or a line of credit will provide you with a lower payment, more interest savings however they come with more volatility.

The good news is that you can always look to refinance out of any of these suggestions and into the other if you see it is not working for you.

Good luck. | 02.13.14 @ 23:32
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$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 20:06
Answered by Ted Rood, Mortgage BrokerPRO+ in Maryland Heights, MO
First and foremost, lenders cannot discriminate based on age. I recently did a 30 year loan for an 87 year old borrower. No one involved thought he'd like to be 117 years old! The amortization term that's best for any given borrower depends on their financial stability, debt ratios, and assets (or lack of) for retirement and savings. Most borrowers who take out 30 year loans do not take 30 years to pay them off. They either move, or refinance the loan as rates improve. You can also prepay additional principle, as much as you desire, whenever you want on a mortgage. I wouldn't let the 30 year term scare you, it's just a means of calculating the payment you qualify at, not a requirement to pay for 30 years. | 05.06.15 @ 00:30
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$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 20:06
Answered by Paul Carag, Financial Adviser in Renton, WA
Hi Lynn, just to add to the great advice that Chad and Ted already gave you, it really depends on your future plans, your intentions of paying off a house or not, and your estate plans (what happens to the home when you pass away). From a purely economical stand-point, you should choose the mortgage option that affords you the lowest payment and here are two reasons why: 1) Your debt to income ratio will be more favorable, which also impacts your credit score, and 2) You'll have more money left over at the end of the month to invest into long-term savings, retirement, etc. The more money you put into a house, you lose the opportunity to earn interest on that money forever (time value of money & loss opportunity costs). However, in the end, it really depends on your future plans, and I would encourage you to reach out to a qualified mortgage professional who also understands financial & estate planning or will happily work with your financial planner. Best of luck to you! | 07.08.15 @ 18:40
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$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 20:06
Answered by Tim Hensley, Insurance Agent in Gilbert, AZ
No, don't avoid a 30 year mortgage just because it is for 30 years. Having a 30 year loan versus a shorter loan of say, 15 years, has been and is still being discussed by many "professionals". For example, you can pay your 30 year loan off in 15 years if you like. With a 30 year loan payment you will have more flexibility if needed in the future versus having a 15 year loan, with a higher monthly payment. If you chose a 15 year loan, which has a higher monthly payment and you run into unexpected financial difficulties you will need to continue making that payment even if you cannot afford it. Having a 30 year loan payment you can pay it off in 15 years if you like, except if you have some financial difficulty you can stop making the higher payment and not lose your home, thus, having more flexibility and control of your money. | 12.09.15 @ 19:24
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$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 20:06
As Paul said, age discrimination is illegal. Moreover, age is irrelevant. What's important is your financial goals and abilities. The answers above are mostly spot-on. To give another perspective, consider that on average a home is held for six years. I think the average hold for a 30 year mortgage is about seven years. Financing is about picking the best tool to fit your needs, not the bank's. Believe me, the bank will quickly tell you if you don't fit their needs. | 01.26.16 @ 17:32
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$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 20:06
Answered by David Skow, Mortgage BrokerPRO+ in Seattle , WA
Lynn, no not at all. Use whatever program works for you and your budget, there isn't a rule that states you need to have the loan paid off before you die | 02.11.16 @ 02:12
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$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 20:06
Lynn, the more salient question might be how you plan to pay for the mortgage in your retirement years. You're only 50. Maybe the loan will be paid off by the time you retire or maybe you're anticipating having so much equity that you can convert to a reverse mortgage. Rather than pay-until-I'm-dead, maybe you can approach the question from the perspective of what you aim for retirement to look like. | 02.11.16 @ 19:04
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$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 20:06
Answered by Dave Bradley, Investment Manager (Financial Advisor) in North Charleston, SC
Hi Lynn,

I have no idea if I will be alive in 30 years either but I do know that I have lived responsibly and my family is taken care of financially. to the best of my ability. Ask me in 30 years and we can compare stories.

Do you need a house? Many of our clients own them and others rent using the cash flows from their investments. Every situation is different. so, rather than give you the pros & cons to renting vs owning, I will just share my insight on cash flows that you can use to buy or rent.

With $300K portfolio, we can generate cash flows of $60K/yr or higher. The amount varies and this is on a yearly basis. Will this work for you? No idea. We can customize something for you. Just let us know what you have to work with. Give us a call to discuss your situation in greater detail. No obligation. Our focus is on equity financing,. This gives you wealth creation not wealth redistribution. Many folks find it very difficult to afford debt financing after they have refinanced the debt and created more debt.

It's not what you make, It's what you keep that determines your lifestyle | 04.09.16 @ 22:13
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$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 20:06
Answered by Paul Carson, Loan Officer in Conshohocken, PA
There is no one size fits all answer for everyone. Most important, the debt you take out for your mortgage needs to align with your short and long term financial goals. I have had older clients still take out a 30 year term to minimize their payment. And I have had young clients take out a 15 year on their first home to pay it off in half the time of their friends. | 05.26.16 @ 01:37
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$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 20:06
L
Answered by Lari
You will cut your costs tremendously by taking out a 15-year fixed-interest mortgage. Also put 20% down if possible. Read up on Dave Ramsey, who is a millionaire and will teach you how not to live in debt.
| 10.03.16 @ 13:00
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$commenter.renderDisplayableName() — {comment} | 12.09.16 @ 20:06
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