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How Old Is Too Old to Qualify for Loan?

<i> Campbell, a retired Times staff writer, now is a Phoenix-based free-lance writer</i>

QUESTION: My wife and I are 69 and 70 respectively. We are thinking of buying a modest home. We would want to finance perhaps 75% of the purchase price. Our net worth would exceed the total purchase price, but probably not by much.

Our combined income from retirement should meet the income requirement as long as both of us are living, but due to our late-in-life marriage, retirement benefits do not pass to either survivor. Our credit history is without blemish. What might our chances be of receiving a loan in view of our age?

ANSWER: We all tend to be far too sensitive about our age. When we’re very young we’re impatient to be older. Then, somewhere along the way, we’d prefer to slow the process down. How old is too old to qualify for a mortgage? It’s a good question because a lender’s viewpoint is going to be colored by the attitude of the PMI (private mortgage insurance) company protecting him against loss in the event of default.

An interesting view of the senior citizen as credit risk is offered by William E. Woods, of Valley Mortgage Co. of Sun City, Ariz., which deals extensively with older home buyers. “We really don’t--as a matter of fact, can’t--discriminate against anyone because of age. It’s not uncommon for us to make 30-year loans to 95-year-olds. If the income behind the mortgage is a lifetime pension that’s really all we consider. If the buyer is comfortable with the idea that when the other spouse dies, he’s going to have to sell the house--because a portion of the pension income has stopped--and move to something more affordable, then we’re comfortable with it too.”

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Woods says older home buyers, even though living on a reduced income, are also living without the expense of raising and educating children and are past the day when they feel the need to trade in their car for a new one every year.

But, Woods admits, dealing with senior home buyers is an extremely specialized form of mortgage lending and what may be the “norm” in a retirement community like Sun City (70% of the home purchases, for instance, are for cash) may be viewed entirely differently elsewhere.

The best suggestion: Arm yourself with all of the pertinent facts (how much your combined retirement income will dip when one of you dies), and how much life insurance and Social Security benefits will be available to fill the gap. And then, Woods suggests, “sound out your local loan officers on their policy toward mortgages for the elderly.”

There Was a Secret Buried in Basement

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Q: In 1984 I purchased a triplex rental property, a brick home that had been converted by the owner. I no longer need the write-offs or the hassle of renting, and was fixing the place up to sell.

Imagine my surprise when I lifted the carpet in the basement apartment to repair a loose threshold and discovered that the floor in the main room--a 13-by-26-foot living room--had been put down on dirt and was rotting away. I am now afraid to unload the property because I know it has a structural defect and am completely at a loss as to the proper course of action.

A: Your first order of business is to get yourself a good lawyer because a certain amount of litigation cost is plainly justified here. I think you’ve got a compelling case against both the seller and the broker.

If your lawyer feels that too much time has elapsed, and that it wouldn’t pay to pursue the matter, then I’d be inclined to point out the defect to the mortgage company and walk away from it or sell it (read that as “give it away”) strictly “as is"--rotting floor and all.

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