Average Mortgage Balance By Age

Homeowners may wonder if they’re carrying too large a mortgage and, if so, how to reduce it. Mortgage sizes tend to vary by generation, so one way to assess whether your mortgage may be oversized given your age is by finding out what the average mortgage for your generation is. Then, if your mortgage is higher than that average, it might make sense to consider paying down the balance more aggressively, as well as finding a way to refinance. 

Consider working with a financial advisor to ensure your mortgage is covered in your long-term financial plan.

Average Mortgage Balance By Age

Despite the COVID-19 pandemic’s real estate market, Americans have bought homes in record high numbers. Experian’s State of Credit report ¹  found an increase in mortgage debt across all generations, to a total of $299,242. That’s $18,979 more than the average amount prior to COVID-19. However, not every generation shares the same amount mortgage debt. Here is the latest mortgage debt breakdown by generation, as calculated by Experian:

• Generation Z (16-24): $192,276
• Millennials (25-40): $255,527
• Generation X (41-56): $259,100
• Baby Boomers (57-75): $198,203
• Silent Generation (76+): $163,254

Based on recent real estate trends, millennials are breaking into the market. In an attempt to take advantage of low interest rates and working from home, many are buying out in the suburbs.

Other Debt By Age

Mortgage debt isn’t the only type of debt out there. Credit card debt also makes up a portion of consumer debt, affecting consumers of every age. However, some generations hold greater outstanding balances compared to others. Here is the average credit card debt divided by generation:

• Generation Z (16-24): $2,312
• Millennials (25-40): $4,569
• Generation X (41-56): $7,236
• Baby Boomers (57-75): $6,230
• Silent Generation (76+): $3,821

The average credit card debt is down for all generations compared to years before the COVID-19 pandemic. There is also the average non-mortgage debt, which includes debt such as school and auto loans. Here’s how this category looks:

• Generation Z (16-24): $12,524
• Millennials (25-40): $28,317
• Generation X (41-56): $32,898
• Baby Boomers (57-75): $24,136
• Silent Generation (76+): $11,725

While every generation varies in the amount of debt it carries, there is a pattern. Gen Xers have the highest amount of debt in all three categories, on average. This is likely because they have the most types of debt to pay for, from children’s school loans to car loans to mortgage payments. And often the largest single debt is a mortgage.

Should I Pay Off My Mortgage Early?

Paying off your mortgage early can be beneficial in some circumstances. It frees you up from debt and allows you to focus on other financial needs. However, it might not be the right move for every homeowner. Consider these pros and cons before making a decision on how you’ll handle your future mortgage payments..

Pros of Paying Off Your Mortgage Early

One of the biggest advantages of paying your mortgage early is the reduced interest. Every month you make a payment, some of it goes to interest. The fewer payments you have to make, however, the less you must pay in interest. Although, you should talk to your lender beforehand. Make sure your additional payments go directly to your principal, not interest.

There is also security when you own your home outright. For example, let’s say you haven’t paid off your loan yet. But you’re struggling to keep up with the monthly payments. If you fall behind a significant amount and default, your house may go into foreclosure. But if you have no debt on the home, you don’t have to fear losing it just because you hit a financial rough patch.

More than anything, paying off your mortgage early takes a weight off your shoulders. You no longer have to worry about it. And, you have increased cash flow, helping you achieve financial freedom. That allows you to put money elsewhere, such as other debts or in a savings plan.

Cons of Paying Off Your Mortgage Early

While there is the possibility that paying your mortgage early saves you money in the long run, it may not be the right financial move for you. Some experts believe that Americans should concentrate their efforts in other places.

For instance, using your extra funds to invest instead can be lucrative. The interest you may earn through a stock market portfolio could outpace the interest rate on your mortgage. So, if you dedicate several years to investing, you could come out more financially secure.

Paying off a mortgage early can also result in prepayment penalties. This is essentially a fee you incur if you refinance, sell, or completely pay your mortgage within a timeframe from closing on it. Typically, the period lasts between three to five years. Because of this, it’s important to check with your lender and their rules beforehand.

In addition, your mortgage may play a crucial part in your taxes and credit score. Homeowners can claim the amount they pay in interest on their mortgage to lower their taxable income. You lose this advantage when you pay off your mortgage early. On top of that, you may face a small drop in your credit score. With a mortgage gone, your score may decrease.

How to Pay Off Your Mortgage Early

Paying off your mortgage ahead of schedule can reduce interest costs and free up cash flow for other financial goals. While it requires discipline and planning, even small changes to your payment strategy can make a meaningful difference over time.

One of the most effective ways to pay off your mortgage faster is by making additional payments toward the principal. Even small extra amounts can reduce the total interest you pay and shorten the life of your loan. Consistency is key, as regular extra payments can significantly accelerate your payoff timeline.

Instead of making one monthly payment, consider splitting your mortgage into biweekly payments. This results in 26 half-payments per year, which equals one extra full payment annually. Over time, this approach can reduce your loan balance more quickly and lower interest costs.

Refinancing your mortgage to a shorter loan term, such as moving from a 30-year to a 15-year mortgage, can help you pay off your home faster. While monthly payments may be higher, you’ll typically benefit from a lower interest rate and significantly reduced total interest over the life of the loan.

Reducing discretionary spending can free up additional funds to put toward your mortgage. Redirecting bonuses, tax refunds or other windfalls toward your loan can make a noticeable impact. Prioritizing your mortgage payoff can help you build equity more quickly.

While paying off your mortgage early can be beneficial, it’s important to consider how it fits into your overall financial plan. Balancing extra payments with saving for retirement, building an emergency fund and managing other debts ensures you’re not sacrificing long-term financial security for a single goal.

Bottom Line

Understanding the average mortgage balance by age can help you benchmark your progress, but your payoff strategy should reflect your personal financial goals. By making extra payments, refinancing strategically and managing expenses, you can reduce your mortgage faster and save on interest. The key is balancing early payoff with other priorities like retirement savings and liquidity, ensuring your overall financial plan remains strong and sustainable.

Tips for Managing Your Mortgage

• Choosing where to direct your money is a big decision. There a multiple factors to consider, including long-term goals and potential taxes. If you don’t know your next step, consider speaking to a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Your mortgage debt can play a significant role in the way you plan retirement. That’s why one of your most useful tools is a free mortgage calculator.
• Mortgage rates are more volatile than they have been in a long time. Check out SmartAsset’s mortgage rates table to get a better idea of what the market looks like right now.

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