Is It Ever Too Late to Get an FHA Mortgage?
The Equal Credit Opportunity Act unmistakably states that it is illegal to decline loan applicants 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 deems your income insufficient, the loan may be denied. Same is true for your credit score: too low could mean a rejection. If your FICO score is at least 740, you’re fine. Below 640, you may be approved but at a greater interest rate. 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. 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 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. You can try computing with the help of an FHA mortgage calculator.
If you are presently mortgage free, you may be cautious about having to make house payments 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 can scarcely make a dent in the principal during 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 get a new mortgage or refinance for less interest. Or you may just sell your existing property to downsize for more convenient upkeep. Both are good reasons to take on a mortgage as a senior. However, note that this will only be an advantage while you’re keeping the mortgage. Selling a recently bought or refinanced home can have you spending more, both financially and physically. Never decide without first running some figures on your FHA mortgage calculator.
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 way your FHA mortgage calculator comes in handy.
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.