Mortgages

Millennials Are Better at Paying Their Mortgage Than You

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Mortgage borrowers younger than 30 years old have the lowest rate of delinquency on their home loans than any other age group, a new report from TransUnion shows, with only 2.34% of mortgages 60 or more days past due.

Overall, the mortgage delinquency rate declined about 20% in the last year, from 4.32% in the second quarter of 2013 to 3.46% at the end of the second quarter this year, and delinquency in all age groups has fallen. It was the 10th consecutive quarter of decline.

How Age Relates to Mortgage Payments

While it’s encouraging to see young consumers dutifully paying their mortgages, it’s important to keep in mind they make up a small share of homeowners with mortgages. Only 4.16% of mortgage accounts belong to borrowers younger than 30 — the next-smallest group is 30- to 39-year-olds, who have 17.53% of outstanding mortgages. That group has a delinquency rate of 3.91%, the second-highest of the five age groups.

Your expenses typically grow as you proceed through adulthood, often a result of starting a family, aiding aging parents and dealing with the unexpected expenses of illnesses or home and auto repairs.

There’s also the fact that recent mortgage borrowers have had to display higher credit quality and sufficient ability to repay the loan, which wasn’t the case many years ago. At the start of the recession, most millennials (Americans younger than 30) were still in college or high school, meaning their mortgages were likely issued after the loan market tightened. That could account for the low delinquency rate in that group. At the same time, borrowers ages 30 to 49 had the highest delinquency rates, which makes sense, given that they were among the many caught up in the mortgage crisis.

The last group, those 60 years and older, had the second-lowest delinquency rate at 2.58% and the second-highest share of mortgages at 26.3%.

What You Need to Know About Mortgage Delinquency

Repaying any loan is important, but staying on top of your mortgage payment is crucial to your financial health. Loan delinquencies hurt your credit score because payment history has the biggest impact on your credit standing, but if you go long enough without paying your mortgage, you’ll lose your home.

A foreclosure can wreck your credit for years — though you can certainly come back from it — which can make it difficult for you to obtain other credit products, affordable insurance rates and even another place to live, considering that landlords check potential tenants’ credit. To see how your payment history, and other financial behaviors, affect your credit standing, you can get two of your credit scores for free every month on Credit.com.

If you’re struggling to make mortgage payments, immediately make changes to your spending habits, and do what you can to scrape together a payment. You can avoid foreclosure if you are honest with yourself and act quickly enough to turn things around.

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