This is a guest post by Mike Egan who is the author of “Your Stronger Financial Future”.
A recent article in the New York Times focuses on seniors who are considering mortgages on new homes when they retire. The article is a good summary of what seniors (or anyone considering a mortgage application) should expect and the specific items to have handy, such as proof of income and a good credit score.
What the article doesn’t address is the question of whether a mortgage is a good idea, either for a senior (65 and older) or anyone else. Think about this – no matter what the term of the home loan, or mortgage, you’ll be paying interest to the lender, plus repaying the principal (the $$ you borrowed) for some period of time. Home mortgages and student loans are the two main examples of what I call “good debt” – which are loans that result in you owning something of value at the end. So, given that a mortgage generally results in you owning the house or condo when you’ve paid back the loan, let’s examine the math involved in a home mortgage.
