Seniors in America have been taking advantage of the low interest rates and tax breaks that come with having a mortgage. Whether you’re looking to to buy a new home, downsize to something smaller or get into a retirement community there are amazing deals available only to seniors. To find the best home loan rates available in your state a simple online search can reveal your best options.
Seniors Are Entitled To Home Loans
Now its important to understand that there is no discrimination of age when it comes to home loans. In fact the Equal Credit Opportunities Act strictly outlines no lender can block a mortgage based on age.1 But one of the trickier parts of obtaining a mortgage as a senior citizen is having enough income as many are on retirement plans. Thankfully there are many choices catered towards seniors only so lets dive in deep and find the best options for you.
Best Loan Lengths For Mortgages?
For a senior a big decision is based on the length of your mortgage duration. Considering you’re in the later stages of life a long loan duration is not always the best choice. Home loans usually come in packages of 10, 15, 20 or even 30 years for most first time buyers. Usually the longer the duration the smaller the monthly payments, however over the entire loan you will often pay more for longer lengths in fees.
Seniors Opt For Reverse Mortgages?
A reverse mortgage is a loan option for seniors that does not require you pay back the loan. With regular mortgages when you improve your house or buy a new one then the lender is able to take that equity out of your house only after foreclosure. But with a reverse mortgage this is not the case. Basically if you’re 62 years old or above and own a home you can leverage your equity in the home for a cash lump sum straight to your account. A HECM loan is an option for most which we will go into detail next.
HECM Mortgages For Seniors?
HECM or otherwise known as Home Equity Conversion Mortgages are offered through the FHA. When people have certain financial limits like being on Social Security, retirement plans and fixed incomes like pensions this can be the best choice. HECM is available to those who are 62 years or older of age, own a home currently and have cleared the majority of their mortgage. It basically allows you to borrow more amounts than traditional loans will offer with your lower fixed incomes. Its a reverse mortgage structured loan.
Are You Refinancing?
Refinancing a mortgage is basically changing your loan structure for a different interest rate or loan duration. It allows you to get into the market with a better interest rate and lower payments in your new or current home. This option is not available for all loans but is available for the majority of first time homeowners who have not recently changed their loan in years.
Cash Out Refinance Loan For Seniors
There is an option available called a Cash Out Refinance Loan. This type of loan allows you to borrow more than what you currently owe but still less than your homes total value. The extra money is yours to use as you please but basically extends the cash amount available to you. Choosing between a home equity loan or a cash refinance loan should be dependent on current interest rates so speaking to a professional can help you decide.
Focus On Assets Over Income
When it comes to applying for home loans as a senior you should opt for choices that consider assets over income. Usually when you apply for a home loan you will need to prove your income, however there are more options for seniors which we will explore.
Do You Know Where You’d Like To Live?
There are many cities available for living in the United States of America all of which have their own pros and cons. New York and San Jose actually could take 15 years on the rent vs buy calculator for buying to beat renting assuming your house price actually goes up in the period. Knowing where you want to live is extremely important in the decision of taking a new home loan as a senior citizen.
What Is Considered Low Income For Seniors?
According to the Federal Poverty Guidelines the poverty level is considered $12,760 in 2020.2
Find Your Perfect Home Loan Today
If you’re in the market for taking out a new home loan and want to either downsize your living or move into a new home its much easier than you think. There are multiple benefits available to you that you might not be aware of. For those over 60 in America knowing the best options can save you huge money over the remainder of your lifetime and get you in a beautiful home. To find the best rates or speak to professionals regarding senior home loans a simple online search will identify your local requirements.