If you're looking to buy a home, but you think you're too old to qualify for a home loan, you should know that it's illegal for lenders to disqualify you based on age alone. In fact, age is one of the protections afforded through the Equal Opportunity Credit Act. Lenders will need to look at the entire package, including your employment history, income, and credit history, in determining your eligibility for a mortgage. However, they cannot base their decision on your age. If you're retired, and you want to buy a home, here are four steps you should take to ensure your success in obtaining a home loan.
Talk to a Mortgage Lender
If you're going to be applying for a home loan after retirement, one of the first things you should do is sit down with a mortgage lender. With mortgage lending, there are a variety of loan options that are available. A mortgage lender will be able to help you choose the one that will work best for your particular circumstances. They'll also help you get preapproved for a loan, which will make it easier for you to shop for a home.
Gather Your Paperwork
Once you've sat down with a mortgage lender, it will be time to start gathering the paperwork you'll need for your loan. Having a complete file will help prevent delays when you start applying for your loan. To make sure your file is complete, you should have at least two years' worth of tax returns, current bank statements, and documentation for any income you plan on using to secure your loan. Some income sources you may be using include retirement accounts, social security, investment income, or income from self-employment. Having documentation for all your income will help increase your chances of being approved for a home loan.
Make a Realistic Budget
When you're retired, the last thing you want to do is get bogged down in debt. To make sure you avoid that with your new mortgage, make sure you create a realistic budget. However, don't just include your current monthly bills. You should also include the things that you ordinarily spend money on, including travel costs.
Consider a Co-Buyer
If it looks like you're going to fall slightly short on the requirements for obtaining a home loan, you may want to consider a co-buyer. Purchasing a home with an adult child provides a couple of benefits. First, it gets you approval for a loan that you might not get without a co-buyer. Second, it eliminates probate issues should you pass away before the home loan is paid in full. That's because the home will automatically transfer to the co-owner of the property.