Finance & Loans

New rules to help borrowers especially retirees qualify for a mortgage

Article submitted by Debt Declaration.

Qualifying for a loan especially for a mortgage loan seems harder these days. But many of us would like to refinance or even take a new mortgage in order to take advantage of still lower interest rates. Typically lenders look at your income in order to assess your ability to pay back the loan. This becomes an issue especially for retirees. A change in under-writing rules that took place recently may help for some who are trying to qualify.

Freddie Mac now allows assets in nest egg such as 401(k) and 457 plans, annuities, and IRA plans to be counted for qualifying for a new mortgage or refinance. They are called “asset depletion rules.” One requirement is that the borrower must be fully vested including no early-withdrawal penalty in the asset. Lenders use guidelines provided by loan guarantors to calculate the asset’s monthly share towards the loan payment. These will be added to dividends and Social Security and pension payments to come up with monthly income of the borrower. Still the borrower will be subject to down payment requirements for the loan such as 30 percent down payment or equity in the property. Check with your lender for details.