Other Refinance Options For Seniors
The rate-and-term option isnt the only way to refinance your mortgage. If you want to tap your homes equity to pay for expenses or consolidate debt, you may want to consider one of these loan types:
- Cash-out refinance A cash-out refinanceand a rate-and-term refinance are similar in that you swap out your existing mortgage for a new one. But theres a major difference: With a cash-out refinance, you replace your existing loan with a new, larger loan. You then pay off your original loan and receive the difference between the two loans in cash at closing.
- Home equity loan A home equity loan is a second mortgage thats secured by your home. If youre approved for one, a lender will issue you a lump sum of money to borrow. With this type of loan, you can typically borrow between 75% and 85% of your homes equity. You repay the loan in fixed monthly installment payments over a certain period of time.
- Home equity line of credit Unlike a home equity loan, a HELOCoperates like a credit card. Once approved, a lender issues you a line of credit you can borrow from as needed during a draw period, which often lasts 10 years. You can generally borrow up to 80% of your equity in the home, and sometimes more, depending on the lender. As with home equity loans, a HELOC uses your home as collateral, so it can be a risky move.
How To Qualify For Low
Both the Fannie and Freddie refinance programs require borrowers to meet certain criteria in order to qualify:
- Borrowers must earn at or below 80% of the areaâs median income
- Proof theyâre current on mortgage payments for the past six consecutive months
- No more than one missed mortgage payment in the past 12 months
- Maximum mortgage loan-to-value ratio of 97%
Chapter 3 Steps For Obtaining A Senior Citizen Mortgage
Time is always important when seeking to obtain any type of mortgage, at any age. Lenders cannot discriminate against age, but they can put forth certain stipulations for mortgage qualification that must be followed. Advance planning is the only way to prepare for getting any type of mortgage, especially in senior years. No mortgage can be obtained instantly. It may be advisable to begin with research well in advance of the time when you expect to need another mortgage or refinancing loan. Watch for new financial mortgage programs from lenders and from the government that might be beneficial to your situation.
The first step to take for obtaining a senior citizen mortgage is to research what is available. To do this, visit several lenders or lender websites, and create a chart that contains the following information for each lender considered:
- Total amount of mortgage
- Whether or not the mortgage will eventually be sold to another entity
- If mortgage is transferable or assumable
- Are there any pre-payment penalties
- Is there a local office where you can go to with questions about your mortgage
A third step is to gather together all paperwork and documentation you are required to have to obtain your senior citizen mortgage. This may include some or all of the following papers:
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Other Food Assistance And Benefits
The different food assistance programs provide free food as well as nutrition services, as well as the opportunity for older people to interact directly with staff or volunteers. Through these programs, benefits can be provided to older people. Which is the best? A volunteer will connect them with other additional services in their community if needed.
The Commodity Supplemental Food Program , funded by the federal government, is another option available to seniors 55-60 years old. By collaborating with the United States Department of Agriculture and utilizing state logistical support, it offers healthy meals. As part of the program, the citizens will receive more nutritional information to enhance their diets.
Mortgages For Seniors On Social Security
Social Security income for retirement or long-term disability can typically be used to help qualify for a mortgage loan.
That means you can likely buy a house or refinance based on Social Security benefits, as long as youre currently receiving them.
SSI should be counted along with retirement funds and other liquid assets to calculate the borrowers total qualifying income.
Since SSI is typically non-taxable, it can also be grossed up. That means the lender can increase the qualifying amount by 10% to 25% and help you qualify for a larger monthly mortgage payment.
For a lender to count Social Security income toward your mortgage, it will need to be documented via an SSA Award letter or proof of current receipt.
If the borrower is drawing Social Security income from another persons work record, theyll need to provide the SSA Award letter and proof of current receipt, as well as verification that the income will continue for at least three years.
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What Types Of Assistance Programs Are Offered To The Senior People
The senior people face pathetic conditions because of old age. They suffer from various diseases that need treatments and proper medication. Thus, they are unable to afford the treatments and medications as they have low income. The government of the United States of America understands the problems of the senior citizens and thus offers many types of assistance and benefits programs so that they can live a healthy and happy life. The assistance programs offer assistance with health insurance, financial benefits, home care, repair programs, Medicare and medication costs to the senior people that are over 50.
What Is The Weatherization Assistance Program
The U.S. Department of Energy Weatherization Assistance Program reduces energy costs for low-income households by increasing the energy efficiency of their homes, while ensuring their health and safety. The program supports 8,500 jobs and provides weatherization services to approximately 35,000 homes every year using DOE funds.
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Know Your Social Security Benefit Options
Neal Stern, CPA, who is also a member of the American Institute of CPAs’ National CPA Financial Literacy Commission, touched on the often overlooked aspects of Social Security.
There are some special considerations for married couples, widows or widowers, and former spouses that can have a significant impact on Social Security benefits.
There are several different Social Security benefits, and it’s essential to understand which ones you and your family may be eligible to receive. Benefit options include:
- Social Security spousal benefits
- Social Security Disability Insurance benefits
Government Grants And Programs Available For The Benefit Of Canadian Homeowners
Although most Canadians prefer to stay in their own homes post-retirement , many feel pressured to consider other options due to lack of sufficient funds or for medical reasons. Whether it is the increased life expectancy, the ever-inflating costs of living, or the lack of proper financial planning, many Canadians find it difficult to lead a comfortable life with their retirement savings alone.
- Two-thirds of the Canadian workforce does not have a workplace pension.
- Private savings options, such as Registered Retirement Savings Plans do not make up for the shortfall in retirement savings.
However, did you know that the Government of Canada seniors benefits offers over 100 different types of grants, rebates and tax credits across provinces, which are meant to help Canadians retain their homeownership or tenancy? Every Canadian province runs its own incentives and programs to help Canadians:
- Save money
- Be self-reliant
- Enjoy the improved quality of life
From grants for home repairs and renovations to property tax credits, write-offs and special needs assistance, the Government of Canada seniors benefits are addressing various aspects of Canadians 55+ living at home.
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Free Mobile Or Landlines For Seniors
that offer discounts on monthly bills in addition to the free mobile service. In partnership with national and regional telecommunications companies, states use grants from the federal government to offer these programs. Lifeline and Link-Up both offer assistance in paying monthly fees and connection fees. Free high-speed internet is also available through these programs.
Common Mistakes That Seniors Make
When it comes to real estate, it is crucial that seniors think about their financial future and not let a sentimental attachment to a home get in the way.
That is, of course, easier said that done!
The biggest mistake that the older seniors are making, says Senior Living Realtor Armand Christopher, is staying in their homes for longer than they should. They need to move to a community where there is care. Or they need to be looked after by home health or by their adult children. The longer a person stays in a home that is not suited to his or her current needs, the more expensive and physically and mentally draining it is ultimately going to become.
I could say the same thing about a younger senior who has not downsized yet, Christopher continues, a person who is living in a 4,000 square foot house that they really dont need. They too should be planning.
One way to cut through the sentimental attachments to a home is to try to look at it purely as an investment. Once youve been in a 4,000 square foot house for 30 years, says Christopher, and that house is paid off and worth half a million dollarsthat equity is just sitting there doing nothing.
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What Challenges Do Seniors Face When Refinancing
While theres no age limit for a mortgage or refinancing, senior citizens may face challenges when it comes to qualifying.
For one thing, it can be hard to demonstrate regular income. Proving your income when you have a job can be easy you simply provide W-2s and pay stubs. But it can be much harder if youre a retiree. If you have a retirement account, a pension, or government annuity income, youll have to prove to a lender that you can access those funds without penalty.
It can also be challenging to prove that your income will last. A lender may require proof that any income paid to you via a 401, IRA, or Keogh retirement account will last at least three years from the date you submit your refinance application.
Fannie Mae High Ltv Refinance Option
Fannie Maes High LTV Refinance Option is a program that caters to borrowers with conventional loans owned by Fannie Mae. LTV stands for loan-to-value ratio, which is the percentage of a homes value that is financed through a mortgage.
Key requirements include having a minimum LTV ratio of 97.01%, and a mortgage that is at least 15 months old.
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How Can I Get Free Money To Renovate My House
You can take advantage of one of the hundreds of programs in Canada to increase the energy efficiency of your home.
Do note that most home improvement grant programs in Canada do not give you free money to renovate your house for aesthetic or purely comfort reasons.
Their purpose is to increase the energy efficiency of your home to aid in environmental goals and save you money on your utility bills, and have strict criteria on the types of retrofits you must execute.
The biggest program in Canada, the Canada Greener Homes Grant, reimburses you up to $5,600 on eligible retrofit activities. You must check your eligibility before going ahead with the plans in order to make sure that you can in fact get reimbursed for your expenses.
If you are a senior in Canada , your province may have special programs in place to make you feel safer and more independent within your own home.
Such programs may give you very favourable loans or even grants to install things such as handrails and bathtub grab bars in your primary residence. Please see the above list for available programs in your province.
Fannie Mae Senior Home Buying Program
Both Fannie Mae and Freddie Mac have policies that allow eligible retirement assets to be used to qualify under certain conditions.
Fannie Mae lets lenders use a borrowers retirement assets to help them qualify for a mortgage.
If the borrower is already using a 401 or other retirement accounts for retirement income, the borrower must demonstrate that the income received from that asset is going to continue for at least three years.
If the borrower is not already using the asset, the lender can compute the income stream that asset could offer.
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The Homeowner Assistance Fund
The Homeowner Assistance Fund was established under President Bidens American Rescue Plan to assist homeowners struggling with their housing payments due to Covid.
HAF was funded with close to $10 billion in financial support to help families weather these challenges and remain in their homes. According to the Treasury press release, aid money will be prioritized for homeowners with pending foreclosures and those with immediate threats to housing stability.
Those who receive assistance through the Homeowner Assistance Fund can use the money for mortgage payments as well as other housing-related bills like homeowners insurance and utilities.
HAF funds are allocated state by state, and its up to state administrators to distribute the funds to individual homeowners who qualify for aid. If you think you might benefit from the Homeowner Assistance Fund, reach out to your loan servicer to talk about whether youre eligible.
You can also use this lookup tool from the Consumer Financial Protection Bureau to find active mortgage relief programs in your area.
Rate And Term Refinance
A rate and term refinance, also known as a traditional refinance, is a type of mortgage refinancing that meets Fannie Mae or Freddie Macs requirements. It can be the most cost-effective way for seniors in good financial standing to refinance their home loan.
A conventional rate and term refinance can give you a lower interest rate, shorter term, or both. If you have at least 20% equity, you wont have to pay for private mortgage insurance, and these loans dont have the additional costs that FHA and VA loans do.
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Government Home Programs Seniors Need To Know About
Retirement is supposed to be an enjoyable time. You should be mindful of, but shouldnt have to worry about your finances. Certainly, you shouldnt need to worry about your housing situation. Unfortunately, this is the case for too many seniors. If you find yourself in this situation, you are not alone. Luckily, there are many government programs designed to help seniors with housing costs.
In July 2021, the average Social Security benefit for seniors was $1,556.72. If you prorate this figure over the course of a year, that means the average retired worker in America will receive $18,680.64 per year. Its a nice gesture, but certainly not an amount you can comfortably live on. With the uncertainty of how long your retirement savings will need to last, its nice to know that there are some government housing programs to help.
Lets take a look at the eight government home programs that seniors need to know about.
Senior Health Insurance Assistance Program
Program to assist the elderly with their health insurance. These professionals can help seniors gain a comprehensive understanding of the health insurance benefits they have, the plans they have available, how to reduce medical bills, and what their rights are. Thus, it could be said to be an assistance program, rather than an economic grants program.
SHIP will also provide beneficiaries with information on prescription medication subsidies or vouchers available in their locality. Participants in this program, including people under 65, will receive Medicare benefits.
In addition to providing beneficiaries with access to trained staff and volunteers, SHIP provides beneficiaries with access to offices of agencies for the elderly. If you visit one of the different operating centers, the counselors will give you all the information you need on the following topics :
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Streamline Refinancing For Fha Va And Usda Loans
Popular mortgage relief programs since 2009 have only been available to homeowners with conventional mortgages backed by Fannie Mae or Freddie Mac.
But what if your loan is government-backed?
Homeowners with federally-backed FHA, VA, and USDA mortgages have access to different mortgage programs than those with conventional loans.
Namely, they can use a Streamline Refinance.
The Streamline Refinance is a special mortgage refi program for people with government-backed loans. Its similar to a mortgage relief refinance because you can use a Streamline Refi even if your home is underwater or has very little equity.
And a Streamline Refinance has other benefits, too.
- Theres less paperwork because you dont have to re-verify your income or employment or get the home appraised
- Government-backed loans typically have below-market mortgage interest rates
- Closing costs are typically cheaper
Homeowners can qualify for an FHA Streamline if theyve made at least three consecutive on-time payments on their existing FHA loan.
Even if you make your three consecutive payments while in forbearance, you may qualify for FHA Streamline refinancing. The Department of Housing and Urban Development , which oversees the Federal Housing Administration, is one of the more lenient housing agencies.
For a VA Streamline Refinance , the rules are more lenient.