July 24, 2017
Retirees who have been out of the mortgage-application process for a while might be surprised at all the extra hoops to jump through. The 2008 financial crisis brought about more stringent lending regulations, which have made qualifying for a mortgage more difficult for just about everyone, but especially so for the self-employed with fluctuating earnings and retirees on fixed incomes. If you’re semiretired and self-employed, you should expect an additional layer of scrutiny in the mortgage application process. For example, Orion’s experienced brokers advise their clients to keep careful track of income and business expenses.
Freddie Mac and Fannie Mae, the government-sponsored enterprises that buy mortgages from lenders, have instituted policy changes that allow eligible retirement assets to be used to qualify under certain conditions. Fannie Mae offers a mortgage (known as HomeReady) that allows income from nonborrowing household members, like adult children, to be counted. Lesser-known reverse mortgage purchase plans allow older borrowers to buy a home without having to come up with a down payment (which can be useful for those wanting a vacation home in addition to their primary residence). And veterans can take advantage of attractive loan terms from the Department of Veterans Affairs.
Orion’s AEs remind our broker clients to tell borrowers that the “stuff” that mattered when they were younger still matters when they’re older. Look at the credit report, credit score, and all their available income. It’s important to remain on the credit grid, even if it means charging a few items each month and quickly paying off the balance. Retiring debt-free is great, but a client doesn’t want to avoid credit altogether.
Orion’s brokers tell clients that to improve their chances of getting approved for any mortgage, try to meet with a broker before retiring. Brokers can offer more flexibility in underwriting guidelines than banks. Other strategies to consider, mortgage experts say, are downsizing or moving to a place where homes are more affordable.