Is It Ever Too Late to Get an FHA Mortgage?
The Equal Credit Opportunity Act clearly provides that it is illegal to reject loan seekers because of age. However, you can be denied a Federal Housing Administration mortgage if you do not qualify financially for 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 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.
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 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 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 plan on taking out a new mortgage or refinance to get a cheaper interest rate. Or you may just sell your existing property to downsize for more convenient upkeep. 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. Selling a recently bought or refinanced home can have you spending more, both financially and physically. It’s no contest – run some calculations on your FHA mortgage calculator to help you come up with a wise decision.
Deciding to get a mortgage or not can also be affected by your cash flow after your spouse passes away (net cash flow is often reduced for the surviving spouse). 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, your heirs can be spared from the unpleasant reality of a foreclosure.