Most lenders like to see evidence of steady, reliable income – and if you're no longer working, it might be difficult for you to show regular cash flow when you apply for a loan or refinance. Luckily, many lenders now allow seniors to use income from their retirement assets to qualify for loans.
If you're nearing retirement, but still make monthly mortgage payments, refinancing that loan may be a smart move. That's especially true if you can get a lower interest rate or shorter loan terms. But it may also make sense to tap into the equity of your home.
Social Security income for retirement or long-term disability can typically be used to help qualify for a mortgage loan. That means you can likely buy a house or refinance based on Social Security benefits, as long as you're currently receiving them.
A standard rule of thumb applies, regardless of age: So long as your mortgage payments are no more than 45 percent of your gross income, you should be able to get the mortgage.
Most lenders consider pension, Social Security and investment income as your regular income. You may also be able to include your annuity, survivor or spousal benefits and retirement account income as long as you can prove it'll continue for at least 3 years. Your assets can contribute to your ability to get a loan.
Getting a mortgage when your only income is Social Security benefits is no different than applying for a home loan when you have a job. You'll need a down payment, proof of income, a qualifying debt-to-income ratio and a viable credit score.
Monthly mortgage payments make sense for retirees who can do it comfortably without sacrificing their standard of living. It's often a good choice for retirees or those just about to retire who are in a high-income bracket, have a low-interest mortgage (less than 5%), and benefit from tax-deductible interest.
Summary: maximum age limits for mortgages
Many lenders impose an age cap at 65 - 70, but will allow the mortgage to continue into retirement if affordability is sufficient. Lender choices become more limited, but some will cap at age 75 and a handful up to 80 if eligibility criteria are met.
Find A Co-Signer
Getting a mortgage co-signer can greatly improve your chances of being approved for a mortgage or refinancing without having a source of income. A co-signer is a person who pledges to the lender that they will make your mortgage payments if you don't.
Best senior citizen FDs
IndusInd Bank offers an interest rate of 7 percent to their senior citizen customers. These interest rates are compounded quarterly and Rs 10,000 will grow into Rs 14147.78. RBL Bank offers an interest rate of 6.80 percent and Rs 10,000 will grow into Rs 14009.38.
Senior citizens can get mortgage loans just like everyone else – it all depends on income, credit score, and cash available. Even seniors into their 90s can get mortgages if they qualify financially. There are varying reasons for wanting a mortgage.
Equity Assets
If you have any retirement accounts, stocks or mutual funds, these are considered equity assets. Be sure to include these on your home loan application.
Lenders don't look at assets, only income and credit scores. So in addition to retirement benefits (e.g. social security), you may have to provide proof of other income -- enough to make the loan payments.
The Bottom Line: It's All About Your Finances
Looking into senior refinance programs can help you save money in the long run. Before you start looking at different home loans for seniors, consider your finances and your long-term goals. If you're planning on staying in your home, refinancing may be a great choice.
Yes, you can get a mortgage at 60, and you might be surprised to find out how many options are available to you that offer both the security and the flexibility that you will need to make the most of your retirement, whether you are 60 or older.
A mortgage that is secured by a lien on a property and that has preference to another mortgage on the same property. In general, the senior mortgage is the original mortgage; one takes out a junior mortgage to pay for home repairs or for other reasons.
And there may even be more wiggle room than that: Denny Ceizyk, senior staff writer for LendingTree, says lenders typically use a maximum debt-to-income ratio of 43% of your pre-tax income to qualify you for a refinance.
As with a home purchase loan, you'll have an easier time qualifying for a refinance with a good credit score and clean credit report. A great score (around 720 or higher) could even earn you a lower interest rate. Again, there's an exception for most Streamline Refinances.
Hardship mortgage programs involve modifying one or more terms of your current loan program, replacing the loan with a new loan via a refinance, or restructuring the payment schedule to help you catch up.
A lifetime mortgage is a type of equity release, a loan secured against your home that allows you to release tax-free cash without needing to move out. Lifetime mortgages are available to homeowners aged 55 or over. You can take the money as a lump sum or as series of lump sums.
There's no age that's considered too old to buy a house. However, there are different considerations to make when buying a house near or in retirement.
To qualify, you must be at least 62 years old, own your home outright (or close to it) and live in the home as your primary residence. You also have to be able to pay for the property taxes, insurance, HOA fees and other upkeep on the home.
Using one of these options to pay off your mortgage can give you a false sense of financial security. Unexpected expenses—such as medical costs, needed home repairs, or emergency travel—can destroy your financial standing if you don't have a cash reserve at the ready.
Percentage Of Your Salary
Some experts recommend that you save at least 70 – 80% of your preretirement income. This means if you earned $100,000 year before retiring, you should plan on spending $70,000 – $80,000 a year in retirement.
Mortgages are the largest debt owned by many Americans, but paying them off before reaching retirement age isn't feasible for everyone. In fact, across the country, nearly 10 million homeowners who are still paying off their mortgage are 65 and older.