You're never too old for a mortgage
- Older people can apply for and get new mortgages, even into their 90s.
- Federal law prohibits lenders from discriminating against older borrowers.
- Still, a mortgage might be financially risky for an elderly person.
Ask Michael Becker, a mortgage banker at WCS Funding Group in Lutherville, Md., the age of his oldest-ever mortgage client, and he'll tell you: 97 years old.
"She was lucid, owned her house outright and had retirement income," Becker says. "She was helping out her son."
While 97 might seem old to be getting a mortgage, age is never a factor in a loan approval. In fact, it's illegal for lenders to discriminate against borrowers on that basis, Becker says. That's because age is a protected category within the Equal Credit Opportunity Act, a federal law that also bars credit discrimination based on a borrower's race, color, religion, national origin, sex, marital status or receipt of public assistance benefits.
Regardless of the borrower's age, sufficient income will be required to obtain a mortgage, Becker says. Some elderly people still earn paychecks or are self-employed. Others use nonemployment sources of income, such as Social Security benefits, a corporate, government or military pension, capital gains from investments, interest income or property rents, to qualify.
"If you're old and living on a fixed income, you may have trouble qualifying for a mortgage," Becker says. "But I've seen it happen."
Most older homeowners own their home free and clear and don't want a new mortgage, says Mark Given, a Realtor and seniors real estate specialist with Coldwell Banker Advantage in Littleton, N.C. But he adds that some older homebuyers are more receptive to financing today than they might have been in the past, in part because they're reluctant to part with cash reserves.
"Maybe they're getting a 15-year mortgage, anticipating they'll pay it off when they can," he says.
Still, a mortgage isn't necessarily a good idea for an elderly person since there are risks as well as benefits, according to Michael Halloran, a wealth management adviser at Estate Strategies Group in Jacksonville, Fla., and past president of the National Association of Estate Planners and Councils.
One risk is that seniors living on a fixed income might not be able to make monthly payments, even if they can meet the lender's guidelines.
"The main question is: Do they have the cash flow to pay for a mortgage?" Halloran says. "Let's see your budget."
Another concern, specific to married couples, is that the death of a spouse can cause a significant reduction in household income, making a payment unaffordable in the future.
"Some pension or retirement plans have settlement options that say while both husband and wife are alive, they get $1,000 a month and at the death of the first, the survivor will get (a percentage) of that amount," he says. "If one of them dies and the check gets cut by 25 percent or 30 percent or 50 percent, we have a problem."