Reduce Your Debt Before Retirement

By: Kathy Sammons Click author's name for more of his/her articles

Seeking a "better life" home owner's move to a bigger and better home every 4-6 years. People erroneously believe that this is actually helping them move up the economic ladder when it fact it is just returning them to the bottom rung. Mortgage loans are front end loaded with interest payments. So, if you are moving on an average of every 5 years then of all of the money that you have paid on your home only 20% has gone to build up equity.

As an example your payment for a $200,000 mortgage at 6% is $1199.00 which includes principal and interest. Your first payment on this mortgage only incudes $199.00 as a principal payment.The next month $100.00 goes to principal and each month after that the principal payment creeps up ever so slowly.

Because there was money to be made in the industry the number of lending institution grew and grew. It started out with just your local bank doing the lending, but over time many mortgage companies came on board. This continued to create competition, the lenders continued to create more and different types of mortgages to try to attract more and more of the market.

Forclosures are higher than they have been for a long time, and people are out of work. Many people could have kept their homes. However, they did not realize that there is a way to accelerate the pay off of their mortgage without refinancing or even changing their monthly payments. Many of them had no idea they could do that.

In 1992, 18% of Americans ages 65 to 74 had housing debt, this was from data compiled by the Employee Benefit Research Institute. By 2004, that percentage had risen to 32%. And in 2007 -- the most recent year available -- 43% of 65- to 74-year-olds had a mortgage. Retire? Are you serious?

The levels of personal debt have also risen. As stated in 2007 dollars, in 1992 the median debt load carried by this same group of folks was $24,609, 15 years later that amount had grown to $69,000. Credit card debt has also risen. In 2007, 37% of 65- to 74-year-olds had a credit-card debt, up five percentage points from 1992. Although, the median amount owed had tripled during that time to $3,000.

If you can pay it off, debt is not always a bad thing. However, there has been a jump in the percentage of older Americans who have debt payments equaling more than 40% of their total income, a threshold level which many lenders consider a yellow flag. Over eleven percent of people 65-74 reached that threshold which was up from 4% in 1992. This is staggering, and something that we need to do something about.

If there is a better way, then they better find it soon. Do you think that if there was a way without refinancing to pay down their mortgage sooner, do you think they would want to know?

They need to go to Pay Off Your Mortgage and learn how to save their retirement now.

Kathy Sammons

Article Source: ABC Article Directory

About The Author: Do you want to see if you qualify to pay off your mortgage sooner and retire comfortably? Follow this link to find out: Pay Off Your Mortgage