New Rules May Ease Mortgage Process for Retirees
Many retirees have been struggling to qualify for a mortgage, finding their post-retirement monthly incomes aren’t sufficient enough to get a loan under today’s tough underwriting standards. The problem was particularly pronounced for retirees who were still making payments on car loans, credit cards, or home equity lines of credit and who found they were unable to qualify under today’s low “debt-to-income” standards.
But mortgage giant Freddie Mac is now allowing retirees—and others—to use income from their 401(k), IRA, and other retirement assets to qualify for a loan.
“That, in turn, might open the door to a money-saving refinancing to a lower-rate loan or a downsizing purchase of a new house or condo,” The Washington Post reports.
The retirement account balances can be used to supplement their incomes for underwriting purposes, but the borrower does not actually have to draw from those balances in order to get the mortgage.
Source: “Mortgage giants make it easier for retirees to secure loans,” The Washington Post (May 23, 2013)
