Senior Refinance Programs For Mortgages And Who Qualifies (2024)

Refinance Programs For Seniors

Whether you want to lower your monthly payment, change your loan term or do both, the following senior refinance programs are available for qualifying homeowners:

Rate-And-Term Refinance

One option to consider is a rate-and-term refinance, sometimes called a “Rato” program for seniors. This is the most traditional form of refinancing where a lender can swap out a borrower’s current loan for a new loan with preferable terms.

For example, if mortgage rates have recently gone down, a borrower can apply for a rate-and-term refinance to lock in a new lower rate, potentially reducing their monthly payment in the process. A rate-and-term refinance can also be used to shorten a loan term.

Cash-Out Refinance

By using a cash-out refinance, seniors can both refinance their mortgage and earn some spending money from their home equity. The drawback is that this will increase the amount you owe on your new home loan, likely extending the amount of time you’re paying your loan off.

You could still lock in a lower rate, however, and put the cash from your home’s equity toward home improvements or other expenses.

Government Refinance Programs For Seniors

Qualifying borrowers may also have refinancing options from the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) and government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.

Offered programs include:

FHA Streamline Refinance

If your current home loan is an FHA loan, you could take advantage of the
FHA Streamline Refinance program for a faster and more simplified refinancing process. A Streamline Refinance can save borrowers time and money by oftentimes skipping the appraisal and bypassing a credit check. Because of how much this can speed up the underwriting process, you can close on your new mortgage sooner than you could with other refinance programs.

VA Interest Rate Reduction Refinance (IRRRL)

Similar to the FHA Streamline Refinance, qualifying military veterans, active-duty service members and spouses can refinance through the VA IRRRL program. Your current mortgage must be a VA loan, and refinancing must provide you better terms, like a lower rate or monthly payment.

Fannie Mae And Freddie Mac Refinance Programs

Fannie Mae and Freddie Mac both offer mortgage refinance programs beneficial to those on a lower income, such as Social Security. Two of these programs are Fannie Mae’s RefiNow™ and Freddie Mac’s Refi Possible℠, both of which offer various benefits that include looser equity and DTI requirements for borrowers.

You can also refinance with Fannie Mae’s HomeReady program, which offers low down payment and mortgage insurance options.

Renovation Refinance

For seniors who want to finance home improvements as well as get a new mortgage, multiple renovation loans can roll the costs of repairs into a new loan. Notable renovation loan options include:

  • Fannie Mae’s HomeStyle® Renovation
  • Freddie Mac’s CHOICERenovation® loan
  • FHA 203(k) loan
  • VA renovation loan

If you’re planning on hunkering down for retirement, it may pay off to invest in some home improvements while you’re refinancing your mortgage. Rocket Mortgage®does not currently offer renovation loans.

Why Is Refinancing Different For Seniors?

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.

Senior Refinance Programs For Mortgages And Who Qualifies (2024)

FAQs

Who's currently eligible for the Home Affordable refinance Program? ›

HARP Eligibility

Your home is your primary residence, a 1-unit second home, or a 1- to 4-unit investment property. Your loan is owned by Fannie Mae. Your loan originated on or before May 31, 2009. Your current loan-to-value (LTV) ratio is more than 80 percent.

Which type of mortgage is typically offered to seniors? ›

Conventional loans are a popular choice for many borrowers. Lenders generally consider Social Security income to be reliable, allowing seniors to qualify. However, these loans often require a good credit score, a low debt-to-income ratio, and sometimes a substantial down payment to secure favorable terms.

Can a 70 year old get a 30 year mortgage? ›

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.

Which type of mortgage solution is only available to senior citizens? ›

Homeowners ages 62 or older with a significant amount of equity in their homes can fund their retirement by taking out a reverse mortgage loan, which converts a portion of their home equity into cash, income, or a line of credit.

Am I eligible to refinance my home? ›

20% Equity Or More

Generally speaking, you should have at least 20% equity in your home if you want to refinance. If you want to get rid of private mortgage insurance (PMI), you'll likely need 20% equity in your home. This number is often the amount of equity you'll need if you want to do a cash-out refinance, too.

Is the government HARP program real? ›

The Home Affordable Refinance Program (HARP) was a program offered by the Federal Housing Finance Agency to homeowners who own homes that are worth less than the outstanding balance on the loan. The program has since ended, but it was intended to provide relief after the financial crisis of 2008.

Can I get a loan if my only income is social security? ›

Social Security benefits are one source of income that can help you qualify for a personal loan if you need one. The proceeds from such a loan won't affect your retirement benefits, but they can have an impact on your benefits if you're receiving SSI. Social Security Administration. "Spotlight on Loans — 2023 Edition."

Can you get a mortgage with only social security income? ›

Eligibility requirements

Mortgage lenders can't deny credit to applicants simply because their income comes from Social Security. Social Security income is viewed the same as any other type of income, with one exception that can work in recipients' favor.

What is the 62 plus loan program? ›

The Home Equity Conversion Mortgage (HECM) is a reverse mortgage regulated by the Department of Housing and Urban Development and insured by the Federal Housing Administration (FHA). HECM loans allow homeowners aged 62 or older to tap into their home equity and remain in their homes while they access their equity.

What is the FHA cash out plan for seniors? ›

The HECM is the FHA's reverse mortgage program that enables you to withdraw a portion of your home's equity to use for home maintenance, repairs, or general living expenses. HECM borrowers may reside in their homes indefinitely as long as property taxes and homeowner's insurance are kept current.

Is it wise to buy a house at 70 years old? ›

The bottom line: It depends on your comfort level with debt. If you feel like you can comfortably make a monthly mortgage payment, whether you're collecting Social Security or living on a fixed income (maybe even a robust one), then taking the home loan may be the right choice.

What is a senior mortgage? ›

A senior mortgage is a type of loan that a person takes out to buy a property. It is called "senior" because it has priority over any other loans taken out on the same property.

What is the easiest type of mortgage to get approved for? ›

FHA mortgage requirements. It may be easier to qualify for an FHA loan, a mortgage backed by the Federal Housing Administration (FHA), than a conventional loan. FHA-approved lenders are protected against losses when you pay for FHA mortgage insurance.

What is a senior reverse mortgage? ›

A reverse mortgage is a unique type of loan for homeowners aged 62 and older. It lets you convert a portion of the equity in your home into cash without having to sell it or make additional monthly payments.

What's better than a reverse mortgage? ›

Alternatives to a reverse mortgage include home equity loan, home equity lines of credit, and cash-out refinances. These financial products can help you tap the equity in your home to use as cash for other purposes.

What is the affordable mortgage rule? ›

Lenders call this the “front-end” ratio. In other words, if your monthly gross income is $10,000 or $120,000 annually, your mortgage payment should be $2,800 or less. Lenders usually require housing expenses plus long-term debt to less than or equal to 33% or 36% of monthly gross income.

Is the HARP program still active? ›

A handful of programs emerged after HARP, including Freddie Mac's Enhanced Relief Refinance Mortgage® and Fannie Mae's High LTV Refinance Option (HIRO) mortgage program. Just like HARP, these programs are no longer active. Fannie and Freddie put these programs on hold in 2021 due to low application numbers.

What is the new HARP 2.0 program? ›

HARP 2.0 streamlined the refinance process by allowing borrowers to replace their existing mortgage loans without getting an appraisal or going through an underwriting process. Plus, it adjusted or waived some fees for homeowners who wanted to reduce their loan terms.

What is a HARP loan and how does it work? ›

In the early 2000s, homeowners with little to no equity had access to a mortgage refinance option known as the Home Affordable Refinance Program or HARP. This government-backed program was designed to help underwater homeowners refinance mortgages at more competitive interest rates.

Top Articles
A Logo Designed by Cassandre
What Is NordLynx and How Does It Work? [Full Explanation]
English Bulldog Puppies For Sale Under 1000 In Florida
Katie Pavlich Bikini Photos
Gamevault Agent
Pieology Nutrition Calculator Mobile
Hocus Pocus Showtimes Near Harkins Theatres Yuma Palms 14
Hendersonville (Tennessee) – Travel guide at Wikivoyage
Compare the Samsung Galaxy S24 - 256GB - Cobalt Violet vs Apple iPhone 16 Pro - 128GB - Desert Titanium | AT&T
Vardis Olive Garden (Georgioupolis, Kreta) ✈️ inkl. Flug buchen
Craigslist Dog Kennels For Sale
Things To Do In Atlanta Tomorrow Night
Non Sequitur
Crossword Nexus Solver
How To Cut Eelgrass Grounded
Pac Man Deviantart
Alexander Funeral Home Gallatin Obituaries
Energy Healing Conference Utah
Geometry Review Quiz 5 Answer Key
Hobby Stores Near Me Now
Icivics The Electoral Process Answer Key
Allybearloves
Bible Gateway passage: Revelation 3 - New Living Translation
Yisd Home Access Center
Pearson Correlation Coefficient
Home
Shadbase Get Out Of Jail
Gina Wilson Angle Addition Postulate
Celina Powell Lil Meech Video: A Controversial Encounter Shakes Social Media - Video Reddit Trend
Walmart Pharmacy Near Me Open
Marquette Gas Prices
A Christmas Horse - Alison Senxation
Ou Football Brainiacs
Access a Shared Resource | Computing for Arts + Sciences
Vera Bradley Factory Outlet Sunbury Products
Pixel Combat Unblocked
Movies - EPIC Theatres
Cvs Sport Physicals
Mercedes W204 Belt Diagram
Mia Malkova Bio, Net Worth, Age & More - Magzica
'Conan Exiles' 3.0 Guide: How To Unlock Spells And Sorcery
Teenbeautyfitness
Where Can I Cash A Huntington National Bank Check
Topos De Bolos Engraçados
Sand Castle Parents Guide
Gregory (Five Nights at Freddy's)
Grand Valley State University Library Hours
Hello – Cornerstone Chapel
Stoughton Commuter Rail Schedule
Nfsd Web Portal
Selly Medaline
Latest Posts
Article information

Author: Tyson Zemlak

Last Updated:

Views: 5964

Rating: 4.2 / 5 (43 voted)

Reviews: 82% of readers found this page helpful

Author information

Name: Tyson Zemlak

Birthday: 1992-03-17

Address: Apt. 662 96191 Quigley Dam, Kubview, MA 42013

Phone: +441678032891

Job: Community-Services Orchestrator

Hobby: Coffee roasting, Calligraphy, Metalworking, Fashion, Vehicle restoration, Shopping, Photography

Introduction: My name is Tyson Zemlak, I am a excited, light, sparkling, super, open, fair, magnificent person who loves writing and wants to share my knowledge and understanding with you.