You've Been Warned: Older Adults Should Avoid This Type Of Mortgage

If you're an older Gen Xer or a Boomer, homeownership should come with considerations people 20 years younger may not need to think about. For instance, being that much closer to retirement — or fully retired — means thinking more about the type of mortgage you take on, whether you're buying a new home or refinancing one you already own. With that in mind, something like an adjustable rate mortgage that's going to fluctuate over time on an amortization schedule clocking over a decade could cost you more in the long end. Similarly, a mortgage with a long amortization of 35 to 40 years may also become a burden in its own way for older adults.

According to the 2025 Northwestern Mutual Planning & Progress Study, 54% of Gen Xers don't believe they'll be financially ready to retire when it's their time to do so. Aside from retirement, 25% of Gen Xer's see paying off their mortgage as one of their more concerning financial challenges. Although 18% of Boomers have the same concern, 41% of them are also unsure if they can afford their retirement. Gen Xers have the additional burden of caring for aging boomer parents, especially with several states expected to become unaffordable for boomers in the next decade. A 2024 Realtor.com survey found that 30% of Gen Xers caring for parents or grandparents — as well as children under 18 years old — can't afford to purchase a home, while another 30% can't afford to pay off their mortgage.

One benefit of owning the roof over your head is it helps people avoid overpriced retirement communities or unstable housing situations. However, that won't be of much use to you if your mortgage costs you more than you can afford. According to a 2023 Joint Center for Housing Studies of Harvard University report, mortgage debt among Americans 65 to 79 years old rose between 1989 and 2022, with mortgage, home equity loans and home equity lines of credit growing from 24% to 41%. Historically low interest rates motivated many to refinance their properties, leading to higher mortgage debt. In short, carrying a mortgage in retirement comes with risk — especially for those on a fixed income — due to higher future interest rates, the potential loss of income after the passing of a partner, or the possibility of costly health issues.

Gen X, as per a 2024 Experian study, carries the second-highest mortgage balance already — Millennials began to outpace Gen X in 2021 — with an average $282,845 mortgage. That said, Gen Xers in 2024 still had the highest average monthly mortgage payment of any generation at $2,313. They also carry the highest overall debt of any generation, which, considering the eldest Gen Xers are now 55 to 60 years old, should also give them pause when it comes to considering longer amortization periods that will have their mortgage following them into retirement.