The mortgage-free mindset of Americans over the age of 55 is changing.
An increasing number of older Americans are taking out home mortgages rather than paying cash to take advantage of tax breaks and the historically low interest rates. Many are seeking cash-out refinances on their primary residence to use that equity as a down payment on a second home or investment property. Others are using it to pay off other high-interest debt.
Will they qualify for a home mortgage without full-time employment?
Lending guidelines have changed dramatically since the 2008 financial crisis, and even more so with COVID-19. If the borrower has regular monthly income, such as social security or pension income, and can meet the debt to income and credit requirements, they can obtain a mortgage.
They may even be able to use eligible retirement assets to qualify under certain conditions. This is helpful for those with significant savings, but who now have a reduced or fixed income since leaving the workforce.
Some aging Americans are questioning if they can obtain a 30-year mortgage.
The answer is yes as long as they meet the loan requirements.
The Equal Opportunity Credit Act prohibits lender discrimination for various protected categories, including the borrower’s age. The lender must base their decision to approve a loan on the borrower’s creditworthiness.
Older Americans and retirees who have sufficient credit and proof of assets can qualify for a home loan, but the process looks different than it used to.
What is today’s home loan process?
Lenders need to be positive that you meet the qualifications and can repay the loan. Your loan originator can assist you with reviewing your credit, income, and assets to get you preapproved for your new mortgage. When preparing for your loan application, including all your income and assets will prove helpful.
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