Is It Possible to Get an FHA Mortgage As a Senior Citizen?
The Equal Credit Opportunity Act clearly provides that it is illegal to reject loan seekers because of age. You can, however, be denied a Federal Housing Administration mortgage you are not financially qualified to take out the loan. Here are general considerations that can affect whether or not you will be approved for an FHA mortgage as a senior:
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. If your FICO score is at least 740, you’re fine. If it’s under 640, you may get approved but with higher interest. Your debt should be below 43% of your gross monthly income, but generally, your budget and personal finances will ultimately determine whether or not you can afford the mortgage. An FHA mortgage calculator can help you compute your own figures.
Usually, you will have to fork out several thousand dollars on a mortgage down payment, probably from the sale of your current home. If you have no property to sell, or if you won’t make enough cash on the sale for the down payment, you may borrow from your savings, but that will decrease your current retirement income. Try to compute using an FHA mortgage calculator.
If you are presently mortgage free, you may be cautious about having to make house payments again. The concept of taking on a mortgage as a senior is complicated even more by the fact that by definition, mortgages come with interest. You may hardly make a dent in the principal wihtin the first few years. If you must sell the house later on, you may make but a small profit from it, if you can even recover your original investment. It’s always smart to be aware of your own figures, thanks to your handy FHA mortgage calculator.
Years of Stay
You may plan on taking out a new mortgage or refinance to get a cheaper interest rate. Or you may just sell your existing property to downsize for more convenient upkeep. Both are good reasons to apply for a mortgage when you’re a senior. Note though that the advantage is only as good as how long you keep the mortgage. If you sell a recently purchased or refinanced home, you could end up spending more than staying put, not just financially but even physically. Never decide without first running some figures on your FHA mortgage calculator.
Deciding to get a mortgage or not can also be affected by your cash flow after your spouse passes away (net cash flow is often reduced 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 where your FHA mortgage calculator comes in handy.
Lastly, with proper planning, estate problems can be avoided even if you die prior to the mortgage being paid off. This means your heirs will not have to go through the devastating experience of seeing your home foreclosed.
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