A Mortgage After 65: A ‘No Brainer’ or a Big Risk?

Conventional wisdom dictates that retiring with debt — especially a debt as large and significant as a mortgage — is financially dicey at best and potentially ruinous at worst.

That’s not how Brian Lindmeier sees it. “It just doesn’t make any sense at all to pay off the house,” he said.

Mr. Lindmeier, 80, a retired purchasing and inventory manager, and his wife, Cindy, who retired from the local public school system, refinanced their home in Orange, Calif., at the end of 2020. They rolled over their balance into a new 30-year loan and slashed their interest rate in half to a rate below 3 percent. Mr. Lindmeier called the move a “no brainer.”

“The money I’d have to take out of my savings or out of my investments is yielding higher interest than the interest I’m paying on the loan,” he said.

For a growing number of older Americans, signing up for a mortgage that is likely to outlive them makes good economic sense. A significant percentage of homeowners have fixed-rate mortgages with historically low rates. Roughly six of 10 mortgage borrowers in the third quarter of last year held loans with interest rates of less than 4 percent, according to the online real estate brokerage Redfin. Nearly a quarter had rates of less than 3 percent.

A campaign of rate increases by the Federal Reserve, which is intended to tamp down inflation, has driven yields that investors can get on ultrasafe instruments like certificates of deposit to 5 percent or higher.