If you are a senior citizen in Utah and want to get a mortgage, you might think your chances of approval are low. Older adults who have already retired might be relying on Social Security retirement benefits and retirement account savings and no longer have income from work. While the process of securing a home loan might be more challenging for seniors than for younger adults, some mortgages are available for seniors and meet their unique financial profiles and needs. Here’s a guide to Utah senior citizen mortgage loans from City Creek Mortgage.

Is It Possible for Seniors to Get Mortgages?

The Equal Credit Opportunity Act is a federal law that was enacted in 1974. This law prohibits discrimination in any credit transaction, including mortgages, based on the protected characteristics of a prospective borrower. Among other protected statuses, it is illegal for lenders to discriminate against senior citizens in mortgage lending.

Lenders may not base a decision to deny a mortgage to a senior citizen because of their age. This means you should be approved for a mortgage regardless of your age as long as you meet the following criteria:

• Acceptable debt-to-income (DTI) ratio
• Good loan-to-value (LTV) ratio
• Good credit score
• Sufficient assets
• Provable income for at least the next three years

The area in which seniors typically run into challenges with getting a home loan is income, especially if they have retired and receive Social Security benefits. An applicant will have to show they have sufficient income and assets to continue making their mortgage payments when other common challenges, including medical problems, are factored in. Seniors who plan to retire within a couple of years should consider what their post-retirement income will be before choosing to move forward with a mortgage.

Reasons Why Seniors Might Want to Get a Mortgage

Seniors might want to get mortgages in Utah for multiple reasons, including:

• Wanting to refinance an existing mortgage with a high rate of interest
• Wanting to access the equity in your home for renovations, other expenses, or for a downpayment on a vacation property
• Wanting to consolidate high-interest debt
• Wanting to downsize to a smaller, more manageable home
• Facing physical challenges with upkeep and maintenance
• Supplementing a fixed income
• Wanting to move to a different area

If any of these reasons apply to you, it might make sense to get a new mortgage. Regardless of why you might want to apply, it’s important to understand the process, the challenges involved, and the available mortgage options.

What Is the Mortgage Process During Retirement?

Younger borrowers typically submit W-2s, pay stubs, and income tax returns to prove their income when they apply for mortgages. When you retire, however, you will no longer receive W-2 forms or have pay stubs. Instead, you’ll have to submit other documentation showing your income, including:

• 1099s from IRAs showing payments
• Social Security annual award letter and proof of recent receipt of benefits
• 401(k) statements
• IRA statements
• Investment account statements
• Documents showing the receipt of dividend and interest income for at least two years
• Statements from IRAs, pensions, 401(k)s, etc. showing they provide you with income and the amounts
• Income tax returns showing receipt of retirement income

According to Freddie Mac’s lender guidelines, lenders can count retirement income for mortgage approval purposes. However, borrowers must show that the income will likely continue for a minimum of the next three years. Lenders are allowed to include dividends and interest, trust fund payments, Social Security retirement benefits, pensions, IRAs, and 401(k) payments.

Things to Consider Before Getting a Mortgage as a Senior Citizen

You need to consider several factors before you decide to apply for a mortgage as a senior citizen, including:

• The costs you will have in retirement on an ongoing basis
• Living within your means so you won’t end up being in bad financial shape in retirement
• Potential healthcare expenses
• Chance of needing long-term care
• Potential tax benefits from owning a home

If taking out a mortgage makes sense given your needs and finances, you should be able to get a mortgage as long as you qualify.

Talk to City Creek Mortgage

No matter why you are thinking about getting a mortgage as a senior citizen living in Utah, it’s important to understand your options and the eligibility requirements. The mortgage experts at City Creek Mortgage can review your situation and help you understand what might make the most sense. Contact us today by calling (801) 501-7950.