Your One Stop Resource for Saving Money.
Mortage Loans for Seniors - The Bills.com Blog
Bills.com Blog > Mortgage Questions > Mortage Loans for Seniors
Mortage Loans for Seniors
Question: I turned 60 this year. I am single, live alone, own a home that was purchased 6 years ago after a divorce. I have a nice job making approx. $47,000. I want to move and buy another house but don't know if that is wise at this time or if i should wait until I am ready to retire (maybe 6 or 7 years?). Will a mortgage company givea new loan to a 60 yr old woman? I owe less than $100,000 on this house. It's a two story and I want a ranch style and downsize as well. I wish to know what the best way to go financially.
Answer: Typically, there are several considerations when getting a loan - three of the most important are: i) your loan-to-value; ii) your debt-to-income ratio; and iii) your credit rating.
I will review each one in turn, focusing on your specific situation.
1. Loan to value: This is calculation looking at how much you want to borrow, relative to the value of the home. It is directly impacted by the amount of money that you can put down on your new home. Fortunately, it appears that
you will be able to make some good money on selling your current home (it has probably appreciated over the past 6 years, and you have paid down the loan)... which can be rolled over into a nice down payment.
2. Debt to Income: This ratio looks at your monthly debt obligations (payments of interest and principal) as a percentage of your monthly income. If you are considering retiring in the future, your income will likely decrease... which means that you may want to apply for your new loan while you still have a strong and steady income.
3. Credit Rating: Your loan, including terms like interest rate and points, will depend on your credit worthiness. One measure of credit quality is
a credit score (sometimes a specific 'FICO' score). Your credit rating is calculated based on several variables, including: your payment history (do you have any late payments, charge-offs, etc.), the amount and type of debt that you owe, if you have maxed out any of your trade lines, and then several other secondary factors like the length of your credit history and how many recent inquiries have been made to look at your credit history. If you have a good credit score, you will get a better loan.
I hope that his helps you make the right decision for your particular situation, but it may benefit you to look into buying the new home and getting the new loan, before you retire.
Also, make sure to get a free financial health check-up with Bills IQ!
Submit questions/comments about this post:
Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!
© 2006 - 2008Bills.com LLC. All Rights Reserved.