Even Grandpa Has Mortgage These Days

About a quarter of U.S. census respondents aged 70 and older reported having a mortgage in 2000, up from 19.9 percent in 1980. The number of census respondents in their 60s with a mortgage rose to 44.6 percent, from 34 percent two decades earlier.

While going into old age with a mortgage defies conventional wisdom, it may not be a bad thing.

Borrowers shouldn't necessarily be in a hurry to pay off their entire mortgage, so long as it has a fixed interest rate. "Being debt-free is an inherited ideal from older generations," says John Scherer, principal of Madison, Wis.-based Trinity Financial Planning. "That ideal, good in most respects, is misplaced in the context of an appreciating asset such as one's home."

Historical returns suggest investors will get more from their money by investing it rather than using it to pay off their mortgage in a lump sum, financial advisers say. The actual cost of mortgage payments should decrease with inflation, and mortgage interest also typically qualify homeowners for tax benefits.

--BusinessWeek Online, Marc Hogan (09/28/2006