Issue Date: September 21, 2008

Nearly one-third of homeowners don't carry mortgages on their homes

The richer you are, the more likely you are to have a mortgage

Nearly one-third of homeowners never have to worry about being forced into foreclosure by today's mortgage crisis.

That's because 31.8% of Americans don't carry mortgages on their homes, the Census Bureau says. More than 23.8 million of the nation's 75.1 million homeowners had no mortgages on properties they lived in during 2006, the government reports.

These homeowners typically are far from rich.

"The richer you are, the more likely you are to have a mortgage," says Peter Francese, a demographer who now analyzes trends for the Ogilvy & Mather advertising firm in New York.

More than 81% of homeowners with household incomes of $150,000 or more a year had mortgages in 2006, compared with just 38% of those earning less than $10,000 a year.

"There's a huge economic advantage to having a mortgage," Francese says. With income tax deductions, "it's the cheapest money you'll ever borrow."

If a family of four earning $100,000 a year buys a half-million-dollar house, it can save about $6,000 on taxes by getting a mortgage for 80% of the purchase price of the home, Francese says. If that $400,000 borrowed from the bank at 6% interest were invested ina mutual fund earning perhaps 10%, "you're way ahead of the game" buying a home instead.

The problem, of course, is that not everyone can qualify for a mortgage. And in these shaky economic times, it's getting harder for people with questionable credit to get loans.

People who don't get mortgages include those who buy the least expensive homes available -- mobile homes. They almost never get conventional mortgages because lenders don't offer such loans on these properties.

Sometimes, friends and relatives pool money together to buy a modest home, Francese says. That arrangement has become increasingly common in the immigrant community, especially because illegal immigrants usually can't even apply for loans because they don't have Social Security numbers.

Of course, not all people without loans are low-income.

The super-rich may not want to bother with them, while some people of more modest means can't stand the idea of carrying debt. Many of the elderly, meanwhile, don't have mortgages because they've traded down to smaller homes or paid off their 30-year loans.