Mortgage payments and Medicare cards in more households

WASHINGTON — Ask Norm Edelen how old he'll be when his last mortgage payment is due, and he doesn't miss a beat: 100.

Not that he's troubled by the likelihood that his housing debt will last longer than he will.

"It doesn't bother me at all," said Edelen, 74, of San Bernardino, Calif. "It's not something I ever thought I would live to complete."

Welcome to a new era in home borrowing, where long-term mortgages and home-equity loans are taking their place alongside AARP cards and pension checks.

About 25 percent of Americans over age 65 are still paying home loans, up from 11 percent in 1983, according to a Boston College analysis of data from the Federal Reserve.

Twilight in debt

For many older homeowners, the decision to carry housing debt deeper into their twilight years is by choice. They see their homes, rather than savings accounts, as piggy banks that can be tapped for ready cash through home-equity loans or refinancings.

But the trend reflects sober realities, including lifestyle changes from an earlier, more debt-averse era.

People who marry or remarry in middle age often find themselves making down payments on a home at a stage in life when their own parents had paid off their mortgages.

Others are able to pay off their mortgages but opt to refinance to help make ends meet in retirement, pushing their debt deep into old age.

Soaring home prices have boosted the equity people have in their homes, and low interest rates have allowed them to tap that equity without raising monthly payments.

"As long as you can still find a job at an older age, as long as the housing market remains strong, it's not a terrible thing," said Zhu Xiao Di, a senior research analyst at Harvard University's Joint Center for Housing Studies. "But if bad things happen [economically], it could be a problem.

"Whether this is alarming — or people are just smarter than we thought — I don't know."

If market goes south

If home values plunge or interest rates soar, for example, many homeowners could be squeezed. They would find it difficult to unload the property and shift into something smaller and less expensive, as older homeowners often do. Older workers could be forced to delay retirement.

For people nearing retirement, paying off the loan was once viewed as a rite of passage that freed up cash each month and strengthened a household's ability to handle the unpredictable costs of old age, such as health care.

But a new AARP survey found that among workers 55 and older with mortgages, half doubted they could pay them off before they retired.

Norm Edelen recalled the disruption in his own life that put him in the housing market around his 70th birthday, and the very good outcome that has resulted from his investment.

Edelen, a former television writer and Los Angeles police officer, had decided "to get out of the rat race," and moved with his wife to St. Thomas. They built a successful property-management business, but a series of hurricanes pounded the island economy, and they returned to Southern California in the late 1990s.

Edelen tried to reconnect with television but failed.

"That's pretty much a who-you-know business, and most of the people I knew were either dead or retired," he said. "I was talking to a whole new generation."

No retirement

Retirement was not an option. The Edelens had a young son, and their savings and pension income were not enough to ensure the future they wanted. To build wealth for his family's long-term security, Edelen wanted a piece of Southern California real estate.

In 2001, Edelen borrowed $63,000 — the full purchase price — to buy the two-bedroom condominium he had been renting with his wife. It needed fixing up, but he was delighted to buy it.

"I had to build up some equity somewhere," he said. "Affordable real estate is one of the best ways to build up equity. That's a given for me."

Between his wages and the couple's pension income, the Edelens are able to make the $600 monthly payment, and the strategy has paid off. Their unit recently was appraised at $255,000.

"I got my equity," Edelen said.

Free and clear

Despite the chance for such rewards, traditional wariness toward debt is alive and well. Many older people prefer to own their house free and clear and pass on unencumbered property as an inheritance to their children.

Christopher Cruise, a former mortgage broker who trains people who write home loans, recalled the fading tradition of the "mortgage-burning" party, in which newly debt-free homeowners invited friends over and ignited the old mortgage in a blaze of freedom.

Younger loan agents often have never even heard of the tradition, he said.

"One hundred percent of the people I teach in their late 20s or 30s have no idea what a mortgage burning is," Cruise said. "This whole attitude of paying off the mortgage and owning the home free and clear is disappearing."