subject: Are Baby Boomers Getting Denied At The Bank? [print this page] Recently a new mortgage and home buying issue has come about that has many people concerned. The problem is one of age, which will only get worse as time goes on and more baby boomers begin to face retirement. Even if you may have a pretty secure nest egg saved up for your retirement years ahead, the cut that you monthly income is going to take may not be allow you to handle the purchase of a new home. Lenders will be concerned if you will be able to meet the requirements to pay back a mortgage with an decrease in income.
So can your age really affect your ability to purchase a home and deal with some of the strict unwritten rules that some lenders have enforced? Unfortunately, yes.
Some people find this out the hard way when they go into their local banks to discuss mortgage possibilities. Even those with the most prestigious financial history can have difficulties taking advantage of the recent low interest rates, no matter how long they have owned their home or how many home loans they have taken out in the past that have been paid in full. If they now have insufficient income to pay back the loan, according to the bank or lenders involved, they will no longer be able to borrow the money.
This obviously makes a lot of sense from the point of view of the banker, yet some boomers may not have even dreamed about being denied since their past records are clear of delinquency or foreclosures. It has been happening that it falls on the banker to explain this top people who weren't prepared to hear "no" as an answer.
Individuals who have excellent credit scores, holdings in 401k, checking or savings accounts, and a respectable net worth can be denied a home loan because they simply do not receive enough income from their Social Security or other retirement benefits each month. And this problem appears to be happening more frequently all over the country as more retirees attempt to take out a home loan as they always have in the past only to get faced with the shock of not having substantial income.
If you think you may fall into this category, it may be best to pay for a home outright, if you can, rather than attempting to borrow money from a bank.
Even if borrowers are willing to make adjustments to their income amount such as pulling funds from their checking or bank deposit accounts and setting them aside to help make up for where their monthly income falls short, most of the banks will still neglect to issue out a loan. Similar accounts have occurred due to random bank policies that will not allow a person to receive a home loan, not based on their actual income amount or their credit score, but simply because of strict rules set forth by the bank such as the individual not having a bank account open with them for a long enough period of time.
Fortunately there is some help out there for retirees who wish to receive a secure home loan. Government assisted programs such as Freddie Mac and Fannie Mae can help these people apply for a loan using income from their IRA accounts or other retirement account balances, not just their Social Security Benefits.
It's a tough market out there for boomers! The irony of all this is now that boomers are mature and financially secure they may be on the look out for that dream home that they feel they can finally afford. Yet its a perfect storm of age and bad timing in the housing market if these folks are being turned down. Let's hope they still have their savings and perhaps help from friends or family to rely on to help get them the house of their dreams. Good luck out there!
Copyright (c) 2012 Farm Credit Services of Mid-America
by: Darren Lynn
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