Income that counts
Lenders don't need a paycheck. They need steady, documented income that is likely to continue. Common sources for retirees include:
- Social Security retirement or disability benefits
- Pensions and annuities
- Regular distributions from a 401(k), IRA or similar account
- Investment income, such as dividends and interest
- Rental income, if you own other property
Showing the income will continue
For income like Social Security or a pension, an award letter or recent statements usually does the job. For withdrawals from a retirement account, lenders often want to see that the account is large enough to keep paying at the same level for at least a few years. Expect to share recent account statements.
If you recently retired, a letter from your former employer or plan administrator can help confirm the start date and amount of your benefits.
Using assets to qualify
If you have substantial savings but modest monthly income, some programs can turn part of your assets into qualifying income. The lender uses a formula based on your eligible balances. Rules vary by program, so ask your loan consultant whether this approach could help you.
Your age and fair lending
Under federal fair lending law, a lender can't deny your application or offer you worse terms because of your age. Lenders look at the same things they would for anyone: income, debts, credit and the home. A 30-year loan is available to a 75-year-old borrower just as it is to a 35-year-old.
Choosing a term that fits
The right term depends on what you want from your home in retirement.
- Shorter term: pays the home off sooner, with a higher payment
- Longer term: lowers the monthly payment and frees up cash flow
- Cash-out refinance: taps equity for a project or a cushion, with a larger balance
- Rate-and-term only: lowers your rate without adding to what you owe
Refinance or reverse mortgage?
A reverse mortgage is a different product, generally for homeowners 62 and older. It lets you borrow against your equity without a monthly mortgage payment, but the balance grows over time and the loan is repaid when you sell, move out or pass away. CapCenter doesn't offer reverse mortgages, so compare carefully and get independent advice.
CapCenter refinances come with ZERO Closing Costs (restrictions apply). You need a credit score of at least 620 for a CapCenter loan.
