Once you become a legal adult, you should be able to get a mortgage if you need one. It helps that it’s illegal for a mortgage lender to deny your application based on age. Yet they’re not obliged to lend to you either. It’s your job to put together an application that’ll make potential lenders eager to disburse their loans to you.
For the older population, such as retirees and people over 60, there’s a wide range of mortgage options available. All reverse mortgage lenders will most likely love to lend to homeowners who are over 60. You can make an informed decision by discovering how a reverse mortgage works by ARLO. Other options for pensioners include a conventional mortgage, taking out a second mortgage on their home, or getting a home equity line of credit.
The younger generation, including young professionals and people in their twenties, may have to work a little bit harder at getting approved for a mortgage. This includes getting a parent to co-sign or exploring FHA loans and similar options.
What is a Reverse Mortgage?
A reverse mortgage is a loan that’s secured using a home you own and are living in. With this type of loan, the borrower is given money in return for some or all of the equity in their home. The borrower gets to retain the title of the home and remain responsible for the maintenance of the home until they move, sell, or pass away. Not everyone can qualify for a reverse mortgage loan. Here are some of the most basic requirements:
- The borrower must be a homeowner
- Must be at least 62 years old
- You must reside primarily in the home
What is a Conventional Mortgage?
A conventional mortgage is one that’s not provided by a government entity. They’re offered by private lenders, such as mortgage companies, banks, and credit unions. Some benefits of conventional mortgages over unconventional loans include the fact that they have faster paperwork, offer more options, and have no maximum limit. On the downside, they require higher down payments and high credit scores and are tough to qualify for.
Home Equity Loans and Home Equity Lines of Credit (HELOC)
A home equity loan has no age requirement, and one can receive the loan in a single payment; however, you must have at least 20% equity in your home and make regular repayments of interest and principal. A home equity line of credit is quite similar to home equity loans; however, they’re awarded as a line of credit so that one draws from them as needed. Your credit gets replenished the more you repay your outstanding balance. It typically has a draw period of up to 10 years.
What is an FHA loan?
These types of loans are insured by the Federal Housing Administration (FHA). This insurance allows mortgage lenders to provide low-interest loans and easy credit requirements with smaller down payment amounts. Because of their flexibility and low interest, these loans are the first option for young home buyers and low-income earners. However, everyone can apply for them.
To apply for an FHA, you need to have a ten percent down payment if your credit score is between 500-579 and a 3.5% down payment for credit scores of 580 and higher. You must have proof of employment and a steady income. No foreclosures in recent years and a debt-to-income ratio of less than fifty percent.
Ways for Anyone of Any Age to Qualify for Better Mortgage Rates
These are some tried and tested house-buying ideas that would work for people of all age groups.
Monitor and Improve your Credit: There are certain things to do to ensure that your credit score stays at an acceptable level so that lenders are not afraid to disburse loans in your name. This includes monitoring and improving your payment history. Never going over your credit limit, limiting credit applications, and increasing the length of your payment history.
Save Up Some Money for Down Payment and Closing Costs: Even though you’re applying for a loan, the lender still expects you to make some payments out of pocket. This money should be ready at the time that your application is approved.
Consider New Communities and Up-And-Coming Neighborhoods: Many times, home buyers have their hearts set on popular areas in town where they’ll rather live. Most of the time, the prices of these houses are high especially when they’re around the heart of the city. For this reason, it is important to consider new and developing communities when buying a home. These communities often offer affordable introduction prices, better long-term house value, new amenities, and better home features: such as energy-efficient fixtures and better home styles and designs.