There Are Now More Homeowners That Are Mortgage Free Than Underwater

Over the past few years, we have become increasingly familiar with the term “underwater”; it has been used to explain how the mortgage debt is affecting the housing market.  Underwater is used to describe a loan in which a homeowner owes more on the existing mortgage than the home is actually worth.  While these situations have been widely reported on in the news, what is often overlooked is the large majority of homeowners who actually do not carry a mortgage at all.

It is estimated that approximately 21 million Americans currently own their homes outright.  These homeowners are not burdened with a monthly mortgage payment or any of the other costs associated with carrying a mortgage.  It has also been shown that there are currently more than 14 million homeowners who are underwater on their existing mortgage. 

The amount of homeowners who are currently mortgage free are that way for the same reason that many others are underwater; the real estate market.  Many homeowners who are mortgage free are that way because they chose not to refinance or take a second mortgage out on their home.  The real estate crisis that has left so many others underwater is what may have prevented these homeowners from borrowing against their homes.  Many homeowners did not want to mortgage their home, even though they were fully capable of doing so.  These are the homeowners who are still mortgage free at this time.  If any of these homeowners had chosen to borrow against their home during the crisis, they may have found themselves underwater at the present time.

The demographic and credit scores of those who own their homes outright are much higher than those who don’t.  This may lead us to believe that many who own their homes outright have accomplished that because they earn more than the average homeowner.  The average age range of those who own their homes outright is 65 – 74 years old.  This is primarily attributed to the fact these homeowners have paid off their 30-year mortgages and any secondary mortgages that may have been taken out against the property.

Owning a home outright is what every homeowner dreams of accomplishing one day.  While the recent housing crisis may have made that goal somewhat hard to reach; it is not impossible.  As the market continues to improve, property values will also improve.  With some hard work and patience it may be possible for some homeowners to weather the storm and own their home outright in time.  

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