For generations, the goal was simple, pay off your mortgage before retirement and enjoy your golden years debt-free. But today’s retirees are changing the conversation. More and more, homeowners in or near retirement are choosing to take out a mortgage on purpose, not out of necessity. And for many, it is a smart financial move.
So why would someone take on a mortgage after age 60, 70, or even 80? The answer lies in strategy, flexibility, and long-term planning.
Preserving Retirement Assets
Many retirees live on a fixed income, often supported by savings, pensions, or investment accounts. Tapping into these accounts to buy a home in cash might not always be the best financial decision. Leaving more money invested can potentially result in better long-term returns than paying for a home outright.
Taking out a mortgage allows retirees to keep their assets working for them, while still enjoying the security and comfort of homeownership. This is especially true when interest rates are favorable, or when the goal is to maintain liquidity.
Buying a New Home That Fits the Next Chapter
Some retirees use a mortgage to purchase a home that better suits their lifestyle, perhaps a single-story floor plan, a home closer to family, or a place in a warmer climate. Selling a longtime family home may free up some equity, but not always enough to purchase the new property in full.
In these cases, using a mortgage to bridge the gap provides the freedom to make a move without disrupting financial plans or delaying retirement goals.
Reverse Mortgage Purchase Options
For retirees age 62 and older, a Home Equity Conversion Mortgage for Purchase (HECM for Purchase) is a powerful option. It allows buyers to use a portion of their own funds, combine it with a reverse mortgage, and purchase a new home without taking on monthly mortgage payments.
This program can be especially attractive for those looking to downsize, relocate, or free up cash while still owning a home and living independently. It is not for everyone, but for the right borrower, it offers security, flexibility, and peace of mind.
Tax Strategy and Estate Planning
Some retirees work with financial advisors to manage taxes and preserve wealth for their heirs. A mortgage can play a surprising role in these strategies, helping to control when assets are withdrawn, how gains are taxed, and how much liquidity is available year to year.
In certain cases, leaving assets in place and using a mortgage for major purchases can improve long-term outcomes, for both the retiree and their beneficiaries.
A New Perspective on Home Financing
Today’s retirees are financially savvy, well-informed, and planning for longer, more active retirements. A mortgage, when used intentionally, can support those goals, not get in the way of them.
If you are exploring your options and wondering how home financing fits into your retirement plan, let’s have a conversation. Whether it is a forward mortgage, a reverse option, or something in between, we are here to help you make the decision that is right for you.