Mortgage Policies Affecting Senior Citizens

Senior citizens, especially those who are retired, might struggle to obtain mortgage financing because many mortgage policies work against them. Mortgage lenders consider the gross monthly income and job status of potential borrowers when deciding whether to grant them mortgage loans. These two policies can greatly reduce the chances of some senior citizens from qualifying for mortgage financing.


When deciding whom to loan mortgage money to, financial institutions take a long look at the applicant's gross monthly income. For most borrowers, gross monthly income is the same as their monthly salary. Senior citizens who have retired won't have a monthly salary. They may be collecting Social Security checks, funds from a pension or regular payouts from annuities. Lenders might look at this income as being too small to allow them to handle the financial burden of a monthly loan payment. In such cases, lenders will deny senior citizens who are applying for a mortgage loan.

Employment Status

Mortgage lenders prefer loaning mortgage dollars to borrowers who have worked for at least three years in the same position with the same company. Of course, many seniors are no longer working at all. This gives lenders pause; they want to loan money to borrowers who have a ready source of income. Such borrowers are less likely to default on their mortgage loans.


However, not all mortgage policies negatively impact seniors. Mortgage lenders like to work with borrowers who have a significant amount of savings. Because seniors have had more years to earn money, they often approach their later years with a healthy level of savings. Depending upon how much savings they have accumulated, this can make seniors attractive borrowers to risk-averse mortgage lending companies.

Loan Terms

The most common mortgage loans today are 30-year and 15-year fixed-rate versions. Lenders aren't likely to pass out a 30-year loan to a borrower who is 50 or older. The odds are too high that this borrower will pass away before paying off the loan. This could leave the lender at a loss, depending on the size of the deceased homeowner's estate. Senior borrowers will generally have to apply for shorter-term loans. This will, of course, increase the amount of their monthly payments.

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