As a retired couple financial planning should be characterized as prudent, less aggressive and conservative. How a new home loan would fit into your unique financial mix would be best for a financial adviser to answer. What a new home loan does to your life’s pro forma, is it takes away from your pension and interest generated income, which is typically the mode in which retired couples receive their household income.
If you’re asking if lenders tend to prohibit loans to retired couples, the answer is no. There are a number of legally definable discriminatory factors that lenders will run into if they officially did this; the least of which is age discrimination. The heaviest factor that the lender will weigh against granting a mortgage to a retired couple is income and of course: the bank will look at the event of the mortgage’s full maturity and the borrower’s ultimate capacity to repay the full amount.
While in a regular home loan the borrower usually has to provide proof of income through paystubs or profit and loss statements, when it comes to home loans for retired couples, they will have to provide pension or retirement income statements to prove income. The amount of income received must be able to support the amount being borrowed.
A retired couple may need to co-sign with a working relative in order to qualify for a new mortgage. This will most likely depend on the borrowers age and how much income they receive. For example, a 70 year old borrower probably will not live for another thirty years when the mortgage is paid off in full. If this is the case some mortgage servicers may require a co-signer to ensure the debt will be accounted for.
One strong thing in retired couple’s favor however is predictability. Fixed income is a predictable measure and most retired couples are issued mortgages because the couple does not have the lump sum cash outlay to purchase a home outright but does have the income to sustain a 30 year mortgage. Because of the predictability and consistency of the fixed income situation, a lower interest rate will be issued, compared to even a young working couple’s mortgage.
Individuals who have retired from the military can apply for a special loan type called a “VA home loan.” The GI Bill of Rights allows retired veterans to obtain a home loan with no payment payment. This loan was designed to assist veterans and their families with an opportunities of home ownership and the chance to live the American dream. If you are a retired veteran and in search for a home it would be wise of you to apply for a VA loan from your local lending institution. Make sure to first shop around to ensure you are getting the best deal available.