Tuesday, June 19, 2012

Can a Retired Couple Get a New Home Loan

By Tyler Lacoma

Getting a home loan can be difficult enough for the average borrower, requiring a positive credit score and a dependable source of funds that lenders can count on. Lenders always want to reduce their own risk by only lending money to borrowers that have proven they can pay it off. Unfortunately, retired couples can have a more difficult time meeting lender requirements than other borrowers. Retired couples can get home loans, but it may be a more complex process than it would be for traditional borrowers.

Lenders are often willing to provide loans to retired couples. What matters is not their status of being retired but their ability to pay back the loan. When it comes to this, retired couples can find it difficult to qualify. Lenders are very interested in income, and retirement income can be low, coming in primarily from Social Security and retirement funds and not reaching the levels of more active borrowers.

Retirees who have served in the military may also be able to qualify for VA loans, or mortgages designed for veterans who need help purchasing a house. These loans offer flexible, discount closing costs and guarantee a certain percentage of the loan to the lender (up to 25 percent). This lowers the lender's risk and makes it easier for the retiree to qualify for a loan. VA loans may also be used by a widowed spouse.

If a retired couple is struggling to get a home loan, they should consider having a co-signer on the loan. Co-signers sign the mortgage contract along with the retired couple and agree to take responsibility for the loan if the retirees are unable to make payments. This boosts the combined credit score for the mortgage and decreases risk in the eyes of the lender. This option is especially useful for retirees that have an absence of credit but a strong income.

Reverse mortgages are loans especially designed for elderly borrowers who do not have a high level of income but live in a home that has been fully paid off. Reverse mortgages lend money to these homeowners immediately, either as a lump sum or in installments, but do not require repayment right away. Instead, when the home is sold or becomes part of an estate (when a death occurs), the value in the home is used to pay off the loan and all interest that was accumulated in the intervening period.


http://www.lenderva.com

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