Is It Ever Too Late 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:
If the bank or mortgage company thinks your income is not enough, you could be denied the loan. Same is true for your credit score: too low could mean a rejection. 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. Compute your own figures using an FHA mortgage calculator.
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 have no home to sell, or if you won’t have enough from the sale to make the down payment, you can borrow from your savings, but that will have a negative effect on your current retirement income. Try to compute using an FHA mortgage calculator.
If you are mortgage free at the moment, you may hesitate to take on house payments all over again. The idea of getting a mortgage late in life is made even more complex by the definition of the word, “mortgage” itself – that it is loaded with interest. You could barely cut the principal over 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 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 could sell your present house to downsize for more convenient maintenance. 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 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 factors include how much credit you have and whether part of the proceeds from your current home’s sale or mortgage refinance is used to pay off that debt. Another scenario that calls for your handy FHA mortgage calculator.
Finally, proper planning will help you avoid problems with your estate should you die before the mortgage loan is fully paid. This means your heirs will not have to go through the devastating experience of seeing your home foreclosed.