by Jeff Berman
Can You Get a 30 Year Mortgage When You Are 60+?
Traditional financial advice for retirees, and soon to be retirees, has been to reduce debt as much as possible.1 With reduced and fixed income that often comes with retirement, it is considered optimal to have little to no debt—cars, homes, credit cards, etc.—to manage more limited finances. However, in this day and age of people living longer and working into later years, obtaining a mortgage for a new purchase or refinance over the age of 60 is a very real and possible scenario depending on the data to qualify.
The Federal Equal Credit Opportunity Act makes it illegal for mortgage lenders to enforce a mortgage age limit and reject borrowers based on age, color, religion, race or national origin. This act means that you cannot be refused a loan just on the basis of your age. If you are over 18 or under 150 years old, you can apply for a loan without any prejudices regarding your age. Granted, you still need to go through the application process and financially qualify for the loan, but age alone will not automatically keep you from qualifying for a new home loan, refinance loan or home renovation loan.
Second Chances Do Happen
Four years ago when she was 56, Kim2 bought her first house as a single borrower after her divorce. However, second chances in life do happen, especially for this native Texan who has always lived in Plano. Last October, she unexpectedly met the love of her life, and they decided to waste no time moving into another house together. She says of her time living on her own in that house: “I felt grounded and at home. I also was proud of have a place to put back the pieces after my divorce.”
She, at age 60, and her husband Rick, at age 65, together qualified for a 30-year fixed mortgage. Rick chimes in: “I love our new neighborhood,” he says. “It’s a nice feeling to live in something that’s ours as we build the rest of our life together.”
How to Qualify for a Mortgage at Age 60+
Since there is no mortgage age limit what does it take to qualify for a mortgage at a later age? A mortgage company or lender will want proof that you are able to afford your monthly payments, and make them on time. Generally, they look at your debt to income ratio, your credit score, and your gross monthly income. For retirees, mortgage companies look at income resources other than salaries. These may include social security, income from retirement and investment accounts and pensions. Seniors may have the additional advantage of having a longer and stronger credit history than younger applicants just getting started on their careers and jobs.
As a 60+ year old, once you have decided to apply for a mortgage, refinance or renovation loan, you will need to decide what type of loan makes sense for you. A 15 year mortgage will have higher monthly payments, but you will save a lot of interest over the term of the loan, and you run the potential to have your home paid off either before or sooner into your retirement. A 30 year mortgage is also an option, reducing your monthly payments to free up more money for other expenses. Your financial adviser and mortgage consultant can help you decide which makes the most sense for you. In addition, especially if you select a 30 year mortgage, it’s a good idea to work with your children, financial adviser, and an attorney to design an estate plan, outlining how the house and mortgage will be handled if you pass before the term of your loan.
There are benefits to getting a new mortgage purchase loan, refinance loan, or home renovation loan in your later years. First of all, if you already have a mortgage, you may benefit from a lower interest rate. Even if there are closing costs involved, if you plan on staying in your home for many more years, a refinance may be an attractive option. Buying a new home may give you security and comfort in your later years, whether you are downsizing from a larger home, or concerned about a rental being sold out from under you in later years and needing to move quickly when you are less physically able.
A Home Loan for Retirement
When 69-year old William2 from Dallas decided to buy his first home, his three kids in their 30s and 40s were not initially on board. William had been a lifelong renter with his late wife. His kids thought the 30 year mortgage would be something they’d have to deal with eventually.
Luckily, William had a spotless credit record, so getting a loan was no trouble and he went ahead. Seven years later, he’s 76 and still enjoying his one floor, two bedroom, two bathroom house in Old Lake Highlands.
“I’ve never been happier,” William explained. “I feel more relaxed and more secure now in my own home rather than having to rent from a landlord.” Even his kids admit that it was the right thing for him.
If you do your homework by researching all of the financing options and taking a close and realistic look at your personal finances, you can make an educated decision and achieve your retirement and home ownership goals. Whether it is an opportunity to purchase their first home after years of renting, buying a second vacation home, downsizing to a smaller retirement home, or making an investment in a good market, older adults can finance a home at any age without a mortgage age limit!
About the Author:
If you’re interested in a mortgage purchase loan, refinance loan, or home renovation loan, Jeff Berman with PrimeLending offers many different home loan products for a wide variety of financial situations. With over 25 years’ experience in the mortgage industry, Jeff Berman is an expert mortgage lender. In his career he has originated or managed in the tens of thousands of loans. Get in touch today to learn more about your options! Simply contact Jeff Berman “The Mortgage Go To Guy” at 214-989-7700 or complete this form.
1PrimeLending is not authorized to give tax advice. Please consult your tax adviser for tax advice on your specific situation. 2Names changed to protect borrowers’ identity.