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Josh Moody: Can Your Age be a Factor in Qualifying for a 30 Year Mortgage?

My wife and I are in our 60’s and would like to refinance our home to lower the payment. Are we too old to qualify for a 30-year mortgage refinance due to average life expectancy?

Absolutely not. A borrower’s age cannot play a factor in whether or not they get a certain term on a mortgage.  A 30 year mortgage is by far the most common term, with roughly 70% of all mortgages being 30 years.

The obvious benefit of a 30 year loan is that, because it is stretched over a longer term, the borrower has a significantly lower monthly payment than on a 15 or 20 year loan.  This can be beneficial to many senior adult borrowers on fixed incomes.  In the past, if a borrower opted for a 15 or 20 year loan, they would typically receive a much better interest rate for the lower term.  However, with the current market conditions, there isn’t too much difference now between a 15, 20, and 30 year rate.  (In some cases, a 30 year rate could be a little lower than a 20 year.)

It is important to keep in mind that in the first several years of a 30 year loan term, more of the payment will be going to interest than principal. Because they are amortized over 360 months, the reduction in principal will take longer, but the borrower can always make additional principal payments if they choose to.  In other words, obviously a 15 year loan will pay down much quicker than a 30 year, so a borrower needs to keep this in mind when making a decision on the loan term.

In today’s challenging economic environment, it may very well benefit a fixed income borrower to lengthen the term of their loan to a 30 year mortgage in order to achieve a lower payment and free up some cash monthly.  Consult a mortgage professional to see if this is a good option for you.

Josh Moody is with The Mortgage Center Powered By Hometown Lenders. He has almost 20 years experience in the mortgage business. You can submit a mortgage question to Josh for his weekly column by sending an email to [email protected]. Disclosure: The Mortgage Center/Hometown Lenders is also an advertiser in The Gardendale News.