Free & Clear : About 15% of Southland owners enjoy the security of having paid off their home loans.
Paul Jacobs and his wife, Blanche, threw a little party in their Van Nuys backyard not long ago to celebrate something most homeowners only dream of.
After 32 years of payments on their three-bedroom home, they had written their last mortgage check. The place was theirs, free and clear.
A dozen relatives applauded as Jacobs ignited a photocopy of the promissory note over the patio barbecue at the mortgage-burning party, a ritual more common decades ago.
The celebration marked the end of “30 years of sometimes struggling to make the payments and sometimes not,” the retired importer of menswear said.
“You know how life has its ups and downs. Now we never have to worry about having a place to live. It’s a relief.”
The Jacobses are members of a “sizable minority,” said their son, Bill Jacobs, president of the California Mortgage Bankers Assn. Thirty percent to 35% of homeowners nationwide own their property free and clear.
These homeowners are mainly in the conservative, more established communities of the Midwest and the South, where people not lured by jobs elsewhere remain in their homes for longer periods, Jacobs said.
In Los Angeles County, about 18% of the 1.4 million homes have no mortgage, according to DataQuick, a real estate information company in La Jolla. The community with the highest percentage of paid-off homes is Avalon, on Santa Catalina Island, with 36.5%.
In the metropolitan area, Santa Fe Springs, at 24.8%, has the highest percentage of free-and-clear homes, followed by Monterey Park, 23.4%; Commerce, 23.2% and Montebello, 22.7%.
Among Orange County’s 481,000 homes, 13.7% are mortgage-free. The highest percentage of paid-off homes is in Sunset Beach, at 24.6%, followed by Corona del Mar, 20.8%; Modjeska, 19.3%; Los Alamitos, 19% and La Habra, 17.3%
An estimated 82% of homeowners older than 65 own their homes outright, according to the annual housing survey of the U.S. Census.
Jacobs said this statistic reflects the fact that older Americans’ attitudes toward debt were shaped by having gone through the Great Depression, when banks seized homes and businesses put up as collateral.
Today, he said, the younger generation has a much more relaxed attitude toward debt. “Borrowing against the home is the only tax write-off the middle class enjoys and widely uses,” he said.
Seventy-year-old Vernon Wintroub lost that tax advantage when he paid off his 1,800-square-foot, three-bedroom Agoura Hills home, but he is thankful to own the place outright.
“I worked for 52 years. It’s time I owned something,” the retired aerospace engineer said.
Wintroub decided to pay off his mortgage in 1993, when he was getting just 6% on a certificate of deposit and was paying 10% on his $50,000 mortgage.
“When I went to the bank to pay it off,” Wintroub said, “the young girl there said rather enviously, ‘Oh, boy, I wish I could do that!’ ”
“I really wanted to have a party,” said his wife, Eleanor, “but we just went out to dinner.”
Paying off the mortgage gives older homeowners a sense of security, said Dr. Jon Pynoos, professor of gerontology at USC. “In an insecure world, particularly with talk of cuts in various programs from Social Security to Medicare,” Pynoos said, “not having to make payments on the home may be one of the few secure things going for the elderly.”
The paid-off home offers emotional succor as well.
The home has more psychological implications for the elderly than for the young, Pynoos said. This is where they raised their children; they know their neighbors and local shopkeepers. For many, their world begins to shrink to home.
“So paying off the mortgage gives you the sense that the house is really yours,” said Pynoos. “It doesn’t belong to the bank or to somebody else. It’s really yours.”
However, Gib Kerr, president of the Los Angeles chapter of the Institute of Certified Financial Planners, said that sense of security may be illusory.
“I’ve seen people living in $200,000 homes owned free and clear but [who] can’t afford the maintenance and taxes,” Kerr said. “It’s amazing how some people are hooked on the ownership of a house.”
For those in danger of losing homes because of tax or maintenance expenses, Kerr suggests selling the home, purchasing a modestly priced condo with a mortgage for the tax advantage and putting the rest in conservative income-producing investments.
“I ask my clients to visualize a drawer in the kitchen with $200,000 in cash sitting in it accomplishing absolutely nothing,” Kerr said. “I invariably get a call. It may be a year after, but I find that $200,000 begins to bug them. ‘I love this house, but do I love it that much?’ they wonder.”
Still, paying off his home was a crucial part of Gordon Dillinger’s carefully laid retirement plan. “To me,” said the former Jet Propulsion Laboratory engineer, “pay off the home and everything else falls into place.”
He said not having to make house payments allows him to contribute to causes important to him. He and his wife also are active in their church and like to travel.
“You have the freedom to do those things if you don’t have to worry about a mortgage,” said Dillinger, sitting in his ranch-style house in the foothills of Altadena.
His wife, Jeanette, said, “And there are always those unexpected expenses that come along like an illness or a hospital bill or a new roof. You can take care of it.”
Adele Brook, 69, has set down deep emotional roots in the Northridge home she owns free and clear. “Where would I go? Buy another place? I love this place.”
“This place” is a four-bedroom ranch house where she and her husband, Irving, have lived for 32 years. It is just a few miles from the epicenter of the disastrous 1994 earthquake, but damage was minimal. Still, the 2,000-square-foot home has been freshly painted, re-carpeted and re-wallpapered, and the kitchen has been remodeled.
“The only way we will leave,” said Irving Brook, “is if they carry us out.”
Then there is KCBS-TV political reporter Linda Breakstone, 43, who just made her last mortgage payment on a Cape Cod-style house that perches on a Malibu hillside overlooking the Pacific.
After living there 21 years, she is thinking of selling. The closets, crammed with the clothes a television reporter needs, are too small, she said. The house that once seemed so big is now cramped.
“It’s kind of like when you go to Disneyland when you were a kid and it seemed so big,” Breakstone said, “and now it’s so small.
“And now that I’ve paid off the house, I don’t want it!” she said with a laugh.
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Mortgage-Free in L.A. County
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City Total no. of houses Owned clear Agoura Hills 3,376 7.4% Alhambra 9,907 21.3% Arcadia 10,143 17.8% Artesia 2,964 21.5% Avalon 379 36.5% Bell 2,113 18.2% Bell Gardens 1,177 18.7% Bellflower 8,202 19.7% Beverly Hills 5,735 20.9% Burbank 18,356 20.2% Carson 17,011 15.5% Cerritos 12,427 12.8% City of Commerce 1,455 23.2% Claremont 5,232 18.5% Compton 14,480 17.3% Cudahy 478 19.0% Culver City 5,775 20.3% Downey 18,148 20.4% El Monte 1,904 20.3% El Segundo 2,578 20.1% Gardena 6,797 21.3% Glendale 23,454 18.3% Hawaiian Gardens 1,201 21.4% Hawthorne 6,239 19.6% Hermosa Beach 3,131 17.7% Hidden Hills 536 11.3% Huntington Park 2,994 17.2% Inglewood 10,482 15.1% La Canada/Flnt. 6,479 17.5% La Habra Heights 1,726 17.1% La Mirada 9,837 16.6% La Puente 6,042 15.6% La Verne 2,567 17.1% Lakewood 21,900 19.2% Lancaster 24,861 16.9% Lawndale 2,252 21.1% Lomita 2,907 19.3% Long Beach 58,729 19.0% Los Angeles 457,459 18.0% Lynwood 7,067 13.3% Manhattan Beach 9,087 17.7% Maywood 1,639 17.3% Montebello 8,056 22.7% Monterey Park 10,138 23.4% Norwalk 19,814 17.8% Palmdale 18,411 13.6% Palos Verdes 4,760 16.9% Paramount 3,885 17.9% Pasadena 21,084 18.7% Pico Rivera 11,775 20.6% Pomona 17,685 16.2% Rancho P.V. 11,867 17.7% Redondo Beach 8,929 19.8% Rolling Hills 690 19.9% Rolling Hills Estates 2,270 15.6% Rosemead 4,899 21.5% San Dimas 4,958 12.9% San Fernando 3,527 19.6% San Gabriel 6,098 21.1% San Marino 4,437 18.8% Santa Clarita 8,304 8.0% Santa Fe Springs 3,065 24.8% Santa Monica 7,392 21.3% Sierra Madre 2,993 19.2% Signal Hill 518 22.5% South El Monte 2,284 20.6% South Gate 10,283 15.8% South Pasadena 4,311 18.4% Temple City 2,562 20.4% Torrance 28,258 19.4% Westlake Village 752 3.8% Whittier 16,828 19.7% Other/Unincorp. 364,035 16.9% County Total 1,424,094 17.9%
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Source: DataQuick Information Systems
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Mortgage-Free in Orange County
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City Total no. of houses Owned clear Aliso Viejo 335 5.7% Anaheim 46,224 14.4% Brea 7,968 13.0% Buena Park 15,097 16.3% Capistrano Beach 1,771 16.8% Corona Del Mar 84 20.8% Costa Mesa 15,529 16.7% Coto De Caza 143 1.4% Cypress 11,095 15.0% Dana Point 5,672 12.3% Foothill Ranch 1,248 2.5% Fountain Valley 14,480 13.4% Fullerton 22,521 16.9% Garden Grove 27,828 16.3% Huntington Beach 39,163 13.8% Irvine 19,222 9.4% La Habra 10,515 17.3% La Palma 3,865 13.4% Laguna Beach 7,395 16.1% Laguna Hills 8,205 6.0% Laguna Niguel 11,258 6.1% Lake Forest 11,429 7.4% Los Alamitos 5,398 19.0% Midway City 1,036 17.4% Mission Viejo 23,121 9.8% Modjeska 161 19.3% Newport Beach 5,734 16.9% Orange 24,204 14.0% Placentia 9,740 13.6% Rcho Sta Margarita 4,137 2.4% San Clemente 10,359 15.2% San Juan Capistrano 6,286 12.4% Santa Ana 40,545 16.4% Seal Beach 4,198 17.8% Silverado 416 15.7% South Laguna 4,098 14.8% Stanton 3,859 15.5% Sunset Beach 191 24.6% Trabuco Canyon 4,078 3.1% Tustin 9,154 14.0% Villa Park 1,935 12.0% Westminster 15,699 15.1% Yorba Linda 15,950 8.0% County 481,348 13.7%
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Source: DataQuick Information Systems
