Senior Refinance Programs For Mortgages, And Who Qualifies (2024)

So, what makes getting a mortgage different as a senior? It all depends on your motivation and finances.

Here’s everything you should consider before moving forward with a mortgage refinance as a senior:

Your Reasons For Refinancing

If you’ve lived in your current home for many years or have your mortgage paid off, you might wonder why you’d even want to refinance your home. Does it make sense to go through the entire mortgage process again?

For many seniors, the answer is yes. Reasons vary, but lots of seniors consider refinancing because they:

• Need to access the equity in their home
• Want to lower their mortgage payments
• Realize a new mortgage would lower their interest rate
• Want to change their loan term

Regardless of your motivation for refinancing, you’ll want to make sure your choice makes sense for your financial situation.

Your Assets, Income and Retirement Accounts

Most lenders like to see evidence of steady, reliable income from borrowers – and if you’re no longer working, it might be difficult for you to show regular cash flow when you apply for a refinance.

Luckily, many mortgage lenders now allow retirees to use income from their retirement assets to qualify for home loans. These assets include:

• 401(k)s
• IRAs
• Social Security
• Pensions
• Investment accounts

Bonds, Stocks And Mutual Funds

The type of investments you have may impact how mortgage lenders view your total income as a borrower. If you have accounts made up of bonds, stocks or mutual funds, lenders can only consider 70% of the value of those assets due to their volatility, so you may not qualify for as large of a mortgage as you initially thought.

Retirement Accounts

For your retirement accounts to help your application, you’ll need to demonstrate you can draw on these accounts without penalties for the next 3 years to support both normal living expenses and loan payments. You’ll also need to provide extra documentation on top of the standard mortgage paperwork to show you have access to these accounts.

Not retired yet but planning on retiring soon? Since lenders want to see evidence that senior citizens have finances to cover at least the next 3 years (either from their job or retirement accounts), you might be denied if you inform lenders you plan to retire sooner. Where possible, it might be best to wait and apply once you’re fully retired and can access your retirement accounts.

With that said, you aren’t required to report your planned retirement date. If you do plan on retiring soon, just make sure your finances can cover your mortgage payments once your regular income stops.

Your Thoughts About The Loan Term

Can a 70-year-old choose between a 15- and a 30-year mortgage? Absolutely. The Equal Credit Opportunity Act’s protections extend to your mortgage term. Mortgage lenders can’t deny you a specific loan term on the basis of age.

The loan term you’re comfortable with has much more to do with your finances than your age. Many seniors use a 30-year mortgage because of its relatively low monthly payments, but you might decide to use a 15-year or shorter term depending on your intentions for the house.

In most cases, you don’t need to worry about what will happen to your mortgage if you pass away before it’s paid off. Your loved ones can usually sell the house to repay the remainder of your loan, but if you want your family to keep the home, you may want to set up a life estate and put money aside or plan on using insurance to cover the mortgage.