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Who owns all these homes?

Nearly 40% of U.S. homeowners were living mortgage-free in 2022, according to a Bloomberg analysis of Census Bureau data. Many of them were baby boomers who refinanced when rates were low.

One example is 66-year-old Emmett Tydings, a small business owner in Delaware. With the overarching goal of socking away money for retirement, he decided to refinance out of a traditional 30-year mortgage into a 20-year, then into a 15-year and finally a 10-year deal, lowering his interest rate each time.

Now living mortgage-free, he told Bloomberg: “We’re focused on saving still. If we need something, we can buy it. We can travel without worry but are keeping it limited until we retire full time.”

Bloomberg’s analysis found the share of mortgage-free U.S. homes went up around five percentage points from 2012 to 2022. Around 33.3 million single-family homes and condos were mortgage-free in 2022, up from 25.4 million a decade prior, a jump of 31%.

Overall, Americans aged 65 or older owned almost 33% of the 84.6 million owner-occupied homes that existed 2022, a 4.6% increase from 10 years earlier. That percentage does not include all baby boomers, so the share of homeownership among this generation is likely much higher.

Unfortunately, the same cannot be said for lots of younger Americans today — many of whom are currently priced out of the market due to high interest rates and inflation.

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How to pay off your mortgage

Paying off your mortgage can help provide you with financial stability. All that hard-earned cash you’ve been throwing at your mortgage lender will now stay in your bank account for you to save, invest or spend as you please.

Mike Dallas, 61, told Bloomberg that not owing the bank each month was a great relief.

“I knew that I could not lose my house to foreclosure,” the Texas native said. “Now all I have to worry about is the tax collector.”

If you’re in a financial situation where you could pay off your mortgage early, this could save you money in the long-term because you’ll accrue less interest.

There are several ways to do this. First, you could try refinancing your mortgage to reduce your loan time or to reduce the amount you pay toward interest — but you may have to wait for interest rates to decline before you do that.

You can also chip away at your debt by making extra mortgage payments — like Anthony Stump, 38, who told Bloomberg he paid off his 30-year mortgage in just nine years with the help of one-off windfalls like tax refunds.

“I know the financial argument, but it’s more the security,” he said.

You can pay extra toward your mortgage in lump sums or through more strategic additions — for instance, paying 1 and 1/12 of your mortgage each month, which would mean you make one whole extra mortgage payment by the end of each year. Before doing this, first check that your lender doesn’t charge too steep of a penalty for paying off your mortgage early.

Is the mortgage-free goal right for you?

Cutting the shackles of your mortgage can have tremendous psychological benefits, according to Michael Roberts, a finance professor at the University of Pennsylvania’s Wharton School.

He told Bloomberg it’s not all about the dollars and dimes, adding: “If people derive some intrinsic happiness out of paying off their mortgage because it reduces their stress, then that has value.”

This may collide with the counsel of some personal finance professionals, some of whom would prefer that you invest any extra funds rather than using it to pay down your mortgage early.

But one person’s happiness is another person’s misery. When figuring out what’s right for you, consider working with a financial adviser who can help you to hit your homeownership and retirement goals.

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Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.

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