A recent CNBC article says according to a 2013 survey of consumer finances by the Federal Reserve, approximately 42% of households with someone age 65 to 74 have a home secured by debt. This number has grown from only 18.5% in 1992 and 32% in 2004. It is expected that this figure will continue to rise because an estimated 10,000 people per day turn 65 as part of the baby boom population.
The article points out that in some situations, the retirees chose to finance a residence rather than paying cash for it even if they had the cash available. With very low interest rates, they can get a tax deduction for the interest on the mortgage and keep their money working for them. Having the flexibility of having cash in savings and other investments can allow you to use the money for other necessities.
To qualify for a mortgage, it often takes more than just good credit and some money in the bank but lenders now also have ability-to-repay regulations they must adhere to. It can sometimes be difficult if you are self-employed or have a fixed income to qualify for a mortgage. There are programs offered through Freddie Mac and Fannie Mae to help eligible retirees qualify for mortgages. They look at savings more heavily and allow the borrower to count income from non-borrowing household members, like adult children.
Poor credit and lack of verifiable income are still big hindrances to qualifying for a mortgage. You should shop around if you are in the market for a mortgage and having at least 40% down will give the mortgage lender more comfort in lending to you.
If you have a mortgage that is behind and you need advice on what to do next, our Bond and Botes offices offer a free, no obligation consultation.
Heather Ellis Banks is an Associate Attorney at the Bond & Botes Law Offices in Knoxville, Tennessee. She holds a Bachelor of Science from the University of Tennessee Knoxville, and a Juris Doctorate from the University of Memphis, Cecil.C. Humphreys School of Law. She has been helping consumers to navigate through the bankruptcy process since 2005. Read her full bio here.