When old is too old

Castles in the Sand

Last week we talked about interest rates and the effect they may be having on the national and local real estate markets. But what if you’re a senior citizen, retired and want to buy another home? There may be barriers to obtaining that loan you never considered.

No secret that lots of real estate is sold to seniors in the state of Florida, and not just Florida. The Consumer Financial Protection Bureau reports that 13% of all mortgages originated in 2021 were by people 65 years of age and older; that is over 1.9 million mortgages.

Nevertheless, older borrowers who no longer draw a paycheck and rely on investments and the interest they generate may have a problem proving to a lender that they have sufficient income and assets to qualify for a mortgage. This is especially true now as housing prices have gone up substantially over the past couple of years.

In addition, widows and widowers could have another problem qualifying if they have lost income after their spouse has passed. Frequently pension benefits are lost or reduced and Social Security benefits will also be reduced. A woman I met told me that after the loss of her husband, she couldn’t afford to stay in her house and didn’t qualify for a home equity loan to help with expenses even though there was adequate equity in the property.

Seniors who are depending on investments to cover living expenses will qualify if they are taking regular distributions from IRA accounts, which are considered income. However, if they are just withdrawing funds as needed, lenders may not consider that as income. Every lender is different, so finding one that has worked with seniors in similar positions is helpful. And of course, keeping your credit score up is essential, so be prudent when considering cosigning a car loan for your grandson.

Last week, we also reported on the sales statistics for Manatee County and the national sales statistics came out right around the same time. The National Association of Realtors said the number of closed sales fell 36.9% from last January; this is in line with our statistics that single-family closings were down by 31.7% in Manatee from last year.

Not similar, however, were the national median existing-home prices, which rose 1.3% in January from a year earlier. Manatee County’s median sale price for single-family homes was up 5.4% compared to last January. This should be expected when you see the selling prices on Island homes and other coastal areas in Manatee County.

Also, according to the National Association of Realtors, seven of the top 10 cities with the largest year-over-year increases are in Florida or the Carolinas. Sarasota is up 19.5%, Naples is up 17.2%, Punta Gorda is up 15.2% and Daytona Beach is up 14.5% – the Florida hot spots. Lawrence Yun, the Chief Economist for the National Association of Realtors, says, “Even with a projected reduction in home sales this year, prices are expected to remain stable in the vast majority of the markets due to extremely limited supply.” I would add that supply is gradually improving with the possibility of it impacting sales values.

If you’re a senior and are experiencing a problem getting financing, remember that it is against the law to discriminate because of age. But it’s not against the law to discriminate because of a lack of income. Use the tools available to get that mortgage done before the prices go up again.