Ever wondered what a person should do who is currently retired from his or her job but always had a dream of buying a home? If he or she is not actively earning, then is that person eligible for a loan?
The answer to this question is very comforting. As per the Equal Credit Opportunity Act, which is a strictly enforced and followed federal law, the age of a person is a category that is protected under this Act and no lenders can discriminate a person based on his or her age. In fact refusing to give a loan to anyone solely based on age is illegal and a punishable offence.
Factors That Do Not Affect Mortgages For Retired Buyers
Besides age, other factors that should not be taken into account while lending money include the borrower’s religion, sex, color, marital status, national origin, and race. The only criteria that is to be considered while lending a mortgage is sufficient income and it doesn’t matter how the money comes to the borrower as far as it is legal.
The source of a retired person’s income can come from various sources like corporate, government or military pension; social security benefits, rent from properties, income from interests or any capital gains from investments totally qualify as valid sources of incomes which are to be considered for giving loan.
Why Retired Persons Must Consider The Mortgage Option
Even though age and retirement should not be a hassle for getting a mortgage, there are many other reasons why retired people and seniors do not like the idea of getting a mortgage. You should always make this decision cautiously and consider your repayment options in retirement. One of the risks is that a retired person living on a fixed income may not be able to make the required monthly payments, which is necessary in case of a mortgages for retired home buyers.
If circumstances turn against him and he finds himself in a situation where his expenses are higher than his income, then mortgage would be a huge problem. The solution is that you must properly check your budget and leave yourself some leeway space every month.
Another problem is death of one of the spouses; in the case we are talking about is a married couple. In case one of them dies and their source of income is the money that they get from retirement or pension plans, then some plans reduce the pension payment. This could severely reduce the money you get, which may not be sufficient to pay the mortgage.
Another area of concern is the vulnerability of retired and aged people to being scammed and cheated. The person cheating and destabilizing your financial safety net could even be someone you trusted. However, the fact remains that retired people get caught in such issues more often, as the troublemakers target them specifically.
Caution Is The Rule For Mortgages In Retirement
In short, even though age or retirement is not a factor that has the power to decide whether or not you will get a mortgage, however, there are several other risks involved in getting mortgages For retired persons. All these factors should be kept in mind before going for a long-term mortgage.