Many seniors expect that by the time they reach a certain age, the process of getting a mortgage will be a thing of the past. However, financial circumstances may dictate otherwise. Some seniors don’t purchase a home until later in life; others may opt to downsize into a small home, which necessitates the need for a mortgage. Getting a mortgage as an older individual can present some unique challenges – the biggest being the fact that most seniors do not have a salary. Understanding just what those challenges are going into the process can help a senior to get the best mortgage for their specific situation.
To start, the most prudent first step is to conduct an overall assessment of current financial conditions. Knowing where you stand from a financial perspective helps to determine what you interest rate might be and what type of home you can afford. This includes pulling credit reports and determining current debt/income ratios. For many older people, among the challenges to getting an affordable mortgage centers on the fact that their income is often fixed beyond a certain point. Therefore, if there is additional income, it is important to include this on the application so the mortgage company can see that the senior can afford the home. Another solutions to this problem may be to obtaining a co-signer from your adult children. However, this can be a tough conversation and many seniors may not want to put that pressure on their children.
Next step is to find a reputable lender. One of the challenges that many seniors have had in getting mortgages over the last few years is finding a lender that has not been caught up previously in shady lending practices. Having a big name in the industry is no longer enough; now, a customer must be able to see a track record of responsible lending. Do some research on the lender to ensure that they have an established record of lending to customers in a way that is line with the company’s mission and core values; in other words, a decent company. Many people found this out the hard way in the real estate crash of 2008.
From this point, it is all about picking the mortgage product right for the senior. Mortgage companies might be more hesitant to offer the longer-term 40-year mortgage products to seniors because of their age, though many will still opt for a 30-year or less option. A reputable mortgage lender can talk over all the options and help seniors to choose the product that works for their budgets, their choice of home and their long-term financial goals.
It is important to be honest and up-front about all things financial when trying to get a mortgage as an elderly individual. Mortgage companies might be hesitant to work with older individuals, but if a person is able to prove that they are solvent, fiscally responsible and willing to do what it takes to sustain a mortgage even in old age, there will be mortgage companies that are is willing to take a chance.
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