Don't just resign yourself to being stuck in a bad situation.
Once you retire and move over to a fixed income, you may find that money starts to get tight. This might hold true even if you're entering retirement with a solid level of savings in your IRA or 401(k).
That's why it's important to go into retirement with as little debt as possible. Ideally, you should aim to have any credit card debt paid off before your career comes to an end. It's also a good idea, if possible, to start retirement without a mortgage.
To be clear, not everyone who retires does so at a point when they're mortgage-free. The National Association of Realtors reports that as of late 2021, nearly 10 million homeowners aged 65 and older still have a mortgage.
But if you're able to pay off your home before you retire, you'll have one less expense to worry about at a time when you might have less financial wiggle room. And that's why it's important to borrow strategically for a home if you're first purchasing one in your 50s.
You may want to stick to a shorter-term loan
There's a reason 30-year mortgages tend to be so popular among home buyers. These loans allow for lower monthly payments than shorter-term loans, which can make homeownership more affordable for a lot of people.
But if you sign a 30-year mortgage in your 50s and you don't accelerate your payments, then you can pretty much bank on not paying off your home until you reach your 80s. And that may not be ideal. So if you're buying in your 50s, a good bet may be to sign a 15-year mortgage. If you stick to that schedule, it's more than conceivable that your home will be paid off in full before your career comes to an end.
But that's not the only reason to look at a 15-year mortgage. Another benefit of signing a shorter-term loan is that you're likely to snag a lower interest rate on a 15-year mortgage than a 30-year mortgage. That's because your lender is taking on less risk by loaning you money for a shorter period of time. And in exchange for that reduced risk, you should expect to be rewarded with a lower interest rate.
Can you afford to sign a 15-year mortgage?
If you can swing the higher monthly payments that come with a 15-year mortgage, then you may find this loan product is the best choice for you when you're buying a home a bit later in life. But before you commit to those larger payments, crunch the numbers.
As a general rule, your total housing costs should not exceed 30% of your take-home pay. And those costs should include more than just your mortgage -- they should account for things like property taxes and homeowners insurance premiums as well.
If you can swing the higher payments that come with a 15-year loan, then by all means, sign one. But if you're not sure, then you're probably better off sticking to a lengthier loan -- and trying your best to pay it off as quickly as you can.
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FAQs
When you're in your 50s, buying a house might cut into your retirement savings significantly, if it pushes your living costs up much higher. Maximizing your retirement contributions may ultimately net you more money than the cash you'd save by paying off a mortgage in the 15 or 20 years before you retire.
Can a 50 year old get a 30 year mortgage? ›
You Can Get a 30-year Mortgage at Any Age
The lender may not deny a loan because they don't think you'll live long enough to pay it off.
Are there 50 year mortgages? ›
Fifty-year mortgages are not new or groundbreaking, and there is a reason why they are not popular. Although they can be helpful for some people looking to buy a house in an expensive housing market, for most of us, it is best avoided. The lower payments of a 50-year mortgage fail to outweigh its cons.
What age is considered elderly in mortgage? ›
No age is too old to buy or refinance a house, if you have the means. The Equal Credit Opportunity Act prohibits lenders from blocking or discouraging anyone from a mortgage based on age. If we're basing eligibility on age alone, a 36-year-old and a 66-year-old have the same chances of qualifying for a mortgage loan.
Can a 50 year old get a 25 year mortgage? ›
Mortgages for over 50s are available, but you'll find that your options begin to change as you get older. Fortunately, you should still have plenty of choice and flexibility when looking, especially if you're in your early 50s and are able to apply for a standard 25-year-mortgage.
Is it smart to buy a house at 58 years old? ›
Any first-time homebuyer should take time to understand the true costs of homeownership. At 58, you'll have a few extra considerations, but if you have good answers for the questions those considerations create, then homeownership might just be for you.
At what age is it harder to get a mortgage? ›
The upshot is that if you're over the age of 62, you're almost 30% more likely to get rejected for a standard mortgage.
Can a 57 year old get a 30 year mortgage? ›
The short answer: absolutely! Luckily, whether you're 25 or 70, lenders look only at certain numbers when reviewing a mortgage application. Those numbers aren't age but rather a borrower's income, credit score, assets, and debts.
Can a 72 year old get a 30 year mortgage? ›
Age doesn't matter. Counterintuitive as it may sound, your loan application for a mortgage to be repaid over 30 years looks the same to lenders whether you are 90 years old or 40.
What is the highest mortgage age? ›
Summary: maximum age limits for mortgages
Many lenders impose an age cap at 65 - 70, but will allow the mortgage to continue into retirement if affordability is sufficient. Lender choices become more limited, but some will cap at age 75 and a handful up to 80 if eligibility criteria are met.
Half of the retired homeowners who were born in the early years of the baby boom wave are still making mortgage payments. They are in a very different situation than their parents' generation when the majority of retirees owned their homes free and clear.
Can you refinance a 50 year mortgage? ›
You can start building equity and refinance later.
So they sign up for a 50-year mortgage and hope their circ*mstances will change. Maybe they think they'll get a promotion and refinance the home later or they'll build equity and sell the house when the market is hotter.
At what age do banks stop giving loans? ›
Generally, a creditor such as a lender or broker cannot use your age to make credit decisions. However, there are exceptions to this rule. For example, age can be considered in a valid credit scoring system. Even then, the credit scoring system may not disfavor applicants 62 years old or older.
Can you get a mortgage with only social security income? ›
If your Social Security payments are high enough to meet your lender's income requirements, you can use it to qualify for a mortgage – even if it's the only source of income on your mortgage application.
Can I borrow money from my social security benefits? ›
Social Security will not give you a loan or let you borrow against your future benefits. You can't, for example, ask to borrow $5,000 and then simply have Social Security deduct that sum from your benefits once you start collecting them.
Is a 50 year old house too old? ›
Age is subjective when it comes to houses, but an unwritten rule is that if a home is 50 years or older it's considered “old” and a home built before 1920 is considered “antique.” There are many factors that can contribute to the condition your potential dream home may be in, and thankfully most can be caught during ...
Is it better to rent or buy a house in your 50s? ›
Renting can be less expensive as you skip the burdens of property taxes and maintenance costs. However, owning can be less stressful since you don't have to worry about a landlord raising your rent. Whichever route you go, housing costs will be one of your major monthly expenses in retirement.
Is 50 too old to buy an investment property? ›
No, never too late for investments and building wealth. Most folks make most of their money between 40 to 60.
What is a good age to get your own house? ›
Is The Best Age To Buy A House Between 30 And 35? The average first-time homebuyer in the United States is around 33 years old, so most people would probably agree that this is the best time to buy a house. By the time you are in your early 30's, you likely have some stability in terms of income and life situation.
