Getting Creative With Mortgages Advice

Are You Too Old 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. 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:

Qualification

If the bank or mortgage company deems your income insufficient, the loan may be denied. The same is true for your credit score: If it’s too low, you may be rejected. 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 has to be under 43% of your gross monthly income, but in the overall picture, it is your budget and personal finances that will determine if you can afford the mortgage or not. An FHA mortgage calculator can help you compute your own figures.

Down Payment

Usually, you will have to fork out several thousand dollars on a mortgage down payment, probably from the sale of your current home. If you don’t have a home to sell, or if you won’t be making enough to make the down payment, you can get the money from your savings, but that will reduce your existing retirement income. You can try computing with the help of an FHA mortgage calculator.

Mortgage-Free

If you are presently mortgage free, you may be cautious about having to make house payments again. The concept of taking on a mortgage as a senior is complicated even more by the fact that by definition, mortgages come with interest. You may hardly make a dent in the principal wihtin the first few years. If you must sell the house later on, you may make but a small profit from it, if you can even recover your original investment. Of course, it’s best to know your own figures, and you can count on an FHA mortgage calculator for this.

Years of Stay

You may take out a new mortgage or refinance for lower interest. Or you could sell your current house to downsize for easier maintenance. These two are good reasons for taking on a mortgage in your senior years. Note however that this is only good for as long as 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. Don’t decide without at least doing some calculations on an FHA mortgage calculator.

Income

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 factors related to income can include the size of your credit and whether you use part of your current home’s sale or mortgage refinance to pay off such debt. Another scenario that calls for your handy FHA mortgage calculator.

Estate Situation

Lastly, with proper planning, estate problems can be avoided even if you die prior to the mortgage being paid off. This way, your heirs can be spared from the unpleasant reality of a foreclosure.