Charming Pinehurst is a golf destination in the lush Sandhills region of south central North Carolina. It was designed in the late-1800s to resemble a New England village and has been drawing golfers and vacationers ever since. The inviting downtown features restored red brick buildings with white framed windows, wooden benches and bountiful gardens.
Picturesque Exeter was settled in 1638 as one of New Hampshire's original four townships. Today it is home to the prestigious Phillips Exeter Academy and is a quiet, safe place built on no-nonsense Yankee practicality.
Mortgage Options for Retirees
Mortgage lenders can not by law discriminate against anyone who wants a home loan as long as he or she can meet the income requirements. These requirements can be met by using current Social Security income, other retirement income and investment account income.
There are also programs designed just for seniors to help them finance a home.
The Federal Home Loan Mortgage Corporation (Freddie Mac) makes it easier for home buyers to qualify for a mortgage if they have substantial assets but a limited income. There are some caveats, but generally lenders can consider IRAs, 401(k)s, lump sum retirement account distributions and proceeds from a business sale to qualify for a mortgage.
The Federal National Mortgage Association (Fannie Mae) lets mortgage lenders factor in a borrower's retirement assets to help him or her qualify for a loan. If the borrower is already using a 401(k), IRA or other retirement accounts for retirement income, then the borrower must show that the income received from the asset is going to continue for at least three more years.
Mortgage lenders can also determine mortgage eligibility based on the borrower's investment funds. If, though, the investment accounts consist of stocks, bonds or mutual funds, then lenders can only factor in 70% of the value of those accounts to determine how many distributions remain and if they will last long enough to cover the mortgage loan.
An asset depletion mortgage is a type of home loan designed for buying a home without a regular income - i.e., job income. It lets borrowers qualify for a loan based on their liquid assets instead of an ongoing income source. The total of the borrower's assets is divided into a monthly "income."
For example, if a person has $350,000 in savings, this amount would be divided by 360 months - the traditional length of a mortgage - and that ressulting number - $972 - would be used to determine eligibility for the mortgage. This strategy usually requires a significant amount in savings, CDs, money market accounts, etc.
Finding a co-signer - often an adult child with a solid income - is a tried and true way to qualify for a home loan. Fannie Mae makes this relatively quick and easy with its HomeReady program. The caveat is that the borrower must be buying a primary residence, not a rental property or a vacation residence.
Homeowners 62 or better might want to consider a reverse mortgage. Offically called a Home Equity Conversion Mortgage (HECM), this type of mortgage is backed by the Federal Housing Administration (FHA) and can used to buy a new home.
The reverse mortgage typically covers 38% to 71% of the new home's purchase price. The rest of the purchase price is covered by proceeds from selling a current home or by using other funds. This strategy lets a buyer get into a new home that he or she might not otherwise be able to afford.
So homebuying mortgage options exist no matter one's age. Although many experts still recommend heading into retirement without a mortgage, it is clear that many retirees are instead choosing to take out a mortgage and purchase a new home to enjoy throughout their golden years.
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