Financing a Mortgage Application after Retiring

Getting a Mortgage after RetirementUpcoming retirees who are interested in refinancing their mortgage or taking out a new mortgage loan with the goal of relocating don’t have to rush the process. It’s still possible for seniors to have their mortgage applications approved after they’ve retired. The financing process will be different, though.

If you’re a retiree interested in getting a loan, contact a professional and highly experienced mortgage broker in Folsom. They can provide more information about the kinds of mortgage you can qualify for and the best deals in the market.

Relying on Assets Rather than Income

Getting approved for a mortgage after your retirement may be more complicated due to your limited sources of income. Your nest egg, Social Security benefits, pension, and more are considered when calculating your total income.

The “drawdown on assets” method is commonly applied to retirees who have chosen to delay receiving their Social Security benefits. Retirees at least 59 ½ years old are qualified to use their retirement account withdrawals to determine their monthly income. Take note, you may need to request a letter from the company handling your individual retirement account to confirm your withdrawals.

The asset depletion method, meanwhile, fits better for retirees with more asset-based investments. It uses your current financial asset value as a basis, deducts the down payment, takes 70% of that amount, and divides it by 360 months to determine your monthly income.

Credit Rating and Occupancy

While mortgage lenders use different credit score guidelines, the hard and fast rule is that the lower credit score you have, the higher interest rate you’ll get. Naturally, retirees with credit ratings of at least 780 get the best rates.

Occupancy status, or how you intend to use the house, affects your rates. You’ll receive better mortgage rates if you’re planning on using the property as your primary home. If you want to rent out a property you’ve declared as a primary home, you’ll either need to get permission from your mortgage lender or wait for the occupancy clause to expire; most such clauses only last for a year.

Taking out a mortgage after retirement requires much thought, so don’t rush the process. Carefully consider all your options with your mortgage broker to ensure you can live comfortably off your savings while paying off your mortgage.