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. Below are general considerations that may affect whether your FHA loan application as a senior will be approved:
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. Below 640, you may be approved but at a greater interest rate. 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. An FHA mortgage calculator can help you compute your own figures.
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. You can try computing with the help of 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 may hardly make a dent in the principal wihtin the first few years. Should you sell the house in the future, you may only make a tiny profit, if you can even regain your original investment that is. It’s always wise to know your own figures, again, thanks to your FHA mortgage calculator.
Years of Stay
You may take out a new mortgage or refinance for lower interest. 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 however that this is only good for as long as you keep the mortgage. If you sell a home you just bought or refinanced, you could end up spending more, physically and financially, than if you just stayed. It’s no contest – run some calculations on your FHA mortgage calculator to help you come up with a wise decision.
Deciding whether to get a mortgage can also be affected by what happens to your income if your spouse dies (as surviving spouse, your net cash flow will probably be reduced). 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 that calls for your handy FHA mortgage calculator.
Finally, with the right planning, estate issues can be avoided even if you passed away before you could pay off the mortgage. This way, you can spare your heirs the negative reality of a foreclosure.
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