You are turning 60 in a year and still, you are thinking of buying that dream house you have always wanted.
You are hitting retirement but you think that by this time, it is hard to qualify for a mortgage because of your age.
What you have to know is that the law disallows mortgage lenders from not making borrowers a mortgage loan because of age. This is under the Equal Credit Opportunity Act.
Qualifying for a mortgage loan after you have stepped out of the working world may not necessarily be difficult, but it can be different. Purchasing a property once you have hit retirement age will demand that you study several factors deliberately.
You have to bear in mind that as you age, your needs change. If you take on a mortgage loan, you will have to carry the burden of making monthly payments in your retirement years.
Experts suggest that if it is not necessary for you to get a mortgage when you are, avoid it. But if you really wish to buy that dream home, there are ways to finance it. Here are the things you need to ponder on before you start sending your application.
Are you willing to make monthly payments during retirement?
When you retire your income may come from social security benefit payments, retirement savings accounts or some investment income. Some seniors refuse to stop working past retirement age.
Your income and reserves may allow you afford a property, but are you willing to make mortgage payments per month for the next 15 to 30 years? Have you considered other expenses that may come along the way involving a lot of money?
The most common expenditures that may compete with your mortgage are those that are health-related. Medical bills and prescription drugs can easily cost you thousands of dollars. If such case happens, will you still be able to continue paying your mortgage?Get Matched with a Lender, Click Here.
Qualifying Using Your Retirement Accounts as Income
Usually, a borrower’s credit and income are used to determine if they can qualify for a mortgage loan. Retired individuals may have a hard time qualifying for a loan because of the lack of income.
Recently, however, retirement assets are allowed as income used to qualify for a mortgage.
Lenders can look at your IRA and 401(k) and lump-sum retirement account distributions as income, but there are some restrictions. Mortgage lenders Lenders may take a senior’s retirement account distributions as income. They can also take a look at the retired borrower’s 401(K) retirement plan and individual retirement account as part of your income qualification.
You have to take note, however, that there are certain restrictions to this. Make sure you ask your lender about it and that they discuss this with you thoroughly.Connect with a Lender, Click Here.
Using Your Household Income to Get a Mortgage
It is possible to get a mortgage with the income of your household family members. HomeReadyTM program offered by Fannie Mae considers the income of non-borrowing household members as part of the qualifying income.
Taking a Reverse Mortgage Loan to Buy a House
A reverse mortgage loan allows eligible homeowners who are 62-year old and above to convert their home equity into readily-usable cash.
The money that comes from a reverse mortgage can be used to buy a new property. The good thing about this loan is that it does not become payable unless the homeowner moves out or sells the home. By using a reverse mortgage, you can avoid exhausting your retirement assets in purchasing a new home.
So if you do not want to pay the loan just yet, you may delay moving out if your previous property to your newly bought one. You can choose the previous house as your primary residence. This way, the reverse mortgage does not become due. When the time comes that you decide to move out or sell the old property, you will repay the reverse mortgage loan balance.
These options are just some of the ways you can qualify for a mortgage to buy a new home. Talk to a lender to explore more options on how you can finance a home purchase in your retirement.
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