Ten years ago, it was very common for homeowners to have a home loan with an outstanding balance that was more than the value of the property. Now, thirty seven percent of homeowners in the United States do not carry a mortgage according to Zillow. This means that the homeowner is “free and clear.” Not only do they not have any further payments due, but also there are no liens on the title.
Homeowners paid their loan off on schedule or ahead of time. Some homeowners paid a prepayment or extra payments. Some of these “free and clear” homeowners also include those who may have the ability to pay cash up front. The term “free and clear” is a term associated with not having a mortgage as you still have to pay for ongoing home maintenances, utilities, etc.
There are a few factors that have increased the number of “free and clear” homeowners in 2019.
Recently, there have been record low mortgage rates. Some homeowners have decided to refinance into loans that carried a shorter term but their monthly payment stayed the same.
A majority of homeowners who fall into this category decided not to acquire any additional debt the last ten years. This has given homeowners the opportunity to make extra payments or pay more each time a payment was made when they were able to.
Another reason the amount of “free and clear” homeowners has increased is because currently there is an older population of homeowners. This older population has not moved for thirty (or more) years so of course they have been able to pay off their mortgage.
Just like anything in life, things can change in a moments notice!