If you are retired and want to get a mortgage, you may not be out of luck, depending on your assets and income.
Q: I’m nearing 70 and my wife is 46. I want to buy her a house. I have “enough” in savings and can buy the home outright. She has solid income and can pay for the maintenance costs going forward. But I’d love to take advantage of the current low mortgage interest rates.
Can someone my age can even get a mortgage? If so, I could invest the proceeds from the mortgage. With her as the beneficiary of my estate, she would have money to pay off the house if she needed down the line.
A: Age is not an issue in determining whether you can get a mortgage or not. A bigger issue is the income you receive and the assets you have. If you are retired and don’t have a job, lenders will look to see if you have other sources of regular, dependable income. Some of that income may be interest income from investments and dividend income from stocks, in addition to pension benefits or even social security.
With that income, you might be able to qualify for a loan. We’d suggest you talk to a big box lender in your area that has a recent reputation for being active in granting mortgages in your neighborhood, a mortgage broker and a smaller community bank.
Interview each of these mortgage lenders and get a sense of what they have to offer and what kind of loan might be right for your finances. You might be pleasantly surprised by their options. While interest rates are extremely low by historical, and for that matter, most standards, the key to your strategy is that you plan to keep your money invested.
Obviously you feel that your investment strategy will generate more income for you than the interest you will pay the bank. If you are successful in your strategy, with these interest rates, you should come out ahead.
If you live in the home long enough, property prices may rise while you pay down the loan and that may reduce the need for a nest egg down the line to pay off the loan.
You seem to have a sound grasp of what you are planning to do and all you need is the right person to walk you through the loan process.
For the loan process, you’ll need to shop around to find the best lender offering the right deal for you. In your case, a 10-year loan at 3 percent (current rates as we went to press) might be a perfect fit. Or, you may decide you want a 15-year loan at 3.25 percent.
Make sure you keep the upfront fees low and try to get the lowest interest rate available to you. We get a sense that you might be successful finding a lender to assist you in the purchase of the home. You may have to put down a slightly larger down payment than otherwise required, but that doesn’t seem to conflict with your overall strategy. Good luck and tell us what happens.