A Simple Plan: Lenders

Are You Too Old to Get an FHA Mortgage?

The Equal Credit Opportunity Act clearly states that it is illegal to discriminate against loan seekers on the basis of age. If you do not financially qualify, however, you can be denied a Federal Housing Administration mortgage. Here are general considerations that can affect whether or not you will be approved for an FHA mortgage as a senior:

Qualification

If the bank or mortgage company finds your income inadequate, you may be denied the loan. The same is true for your credit score: If it’s too low, you may be rejected. A FICO score 740 or above should be fine. If it’s under 640, you may get approved but with higher interest. Your debt must be less than 43% of your gross monthly income, but overall, your budget and personal finances will ultimately determine your capability to pay the mortgage. An FHA mortgage calculator can help you compute your own figures.

Down Payment

Typically, you will have to shell out several thousand dollars as down payment for a mortgage, probably from the proceeds of your current home’s sale. If you don’t have a home to sell, or if you won’t be making enough to make the down payment, you can get the money from your savings, but that will reduce your existing retirement income. Try computing using an FHA mortgage calculator.

Mortgage-Free

If you are mortgage free at the moment, you may hesitate to take on house payments all over again. The idea of taking on a mortgage during one’s senior years is made more confusing by the fact that mortgages, by definition, are laden with interest. You may hardly make a dent in the principal wihtin the first few years. If you later decide to sell the house, you may not get enough profit, if you can even get back your original investment at all. It’s always wise to know your own figures, again, thanks to your FHA mortgage calculator.

Years of Stay

You may take out a new mortgage or refinance for lower interest. Or you may just sell your existing property to downsize for more convenient upkeep. Both are good reasons to take on a mortgage as a senior. Note though that the advantage is only as good as how long you keep the mortgage. If you sell a home you just bought or refinanced, you could end up spending more, physically and financially, than if you just stayed. Don’t decide without at least doing some calculations on an FHA mortgage calculator.

Income

Deciding whether to apply for a mortgage can also depend on what happens to your cash flow should your spouse pass on (net cash flow is usually decreased for the surviving spouse). Other income-related factors can include the amount of credit you have, as well as whether a portion of the proceeds from the sale or mortgage refinance of your current home is used to settle that debt. Another scenario that calls for your handy FHA mortgage calculator.

Estate Situation

Finally, with the right planning, estate issues can be avoided even if you passed away before you could pay off the mortgage. This means your heirs will not have to go through the devastating experience of seeing your home foreclosed.