When it comes to getting a home loan in retirement, mortgage lenders look at a lot of numbers to decide whether a borrower is qualified — but age isn’t one of them. The Equal Credit Opportunity Act makes it unlawful to discriminate against a credit applicant because of age. There are plenty of home loan options available to retirees or seniors that qualify. Here are four senior mortgages to consider:
Conventional loans: Unlike FHA and VA loans, which are backed by the government, conventional loans are made by private lenders. For a traditional loan, you must make a 20 percent down payment or purchase private mortgage insurance (PMI).
Cash out Refinancing: Cash-out refi enables you to take advantage of the equity in your house by taking out a portion of your new mortgage at a cheaper interest rate and possibly shorter term.
Home equity loan: A home equity loan is a one-time payment that typically has a fixed rate, fixed monthly payments, and a duration of five to thirty years. Typically, to qualify, you must have at least 20% equity. Loan-to-value (LTV) limitations set by lenders aid them in determining the maximum amount that can be borrowed.
No-document mortgage: A no-document mortgage is one in which the lender is not required to confirm the borrower’s source of income. Although it’s an uncommon product, borrowers with erratic income may find it appealing. No-doc loans typically call for a higher credit score and a down payment of at least 30%. In comparison to a conventional loan, you can anticipate paying a higher rate as well.
HELOC – Home Equity Line Of Credit: A HELOC is a variable-rate loan that functions much like a credit card, giving you access to a line of credit that you can use whenever you need it. A predetermined period of time will be given to you to borrow the money, followed by a predetermined period of time to repay it. Depending on how much of the credit line you’ve used so far and how interest rates change, your monthly payments will change.
A mortgage can be obtained by pensioners with good credit, enough income, assets, and little debt, however, the process may differ slightly. You might obtain a loan in retirement for a variety of reasons, such as refinance in order to access a lower payment, consolidate debt, remodel your house, create an emergency fund, or purchase a new home.