Retirement Properties Loan
November 22, 2016
Loan Ideas and Products for Retirement Properties
For many people planning their retirement and looking into retirement properties, it may have been decades since they purchased their last residence. Most of us are familiar with the ups and downs of interest rates, which receive a good deal of media coverage. But we are probably less familiar with the range of borrowing opportunities which can assist retirees, both early and late, with their property purchases.
Whether or not you think you need additional borrowing options, it is always a good idea to know what is actually available to you, because that knowledge may open up new opportunities.
IRA and 401(k) Self-Loans
Through your retirement savings, you can actually lend yourself funds to assist with a home purchase. With a traditional or Roth IRA, you can, as a first-time homebuyer, withdraw up to $10,000 without incurring the 10 percent early withdrawal penalty that applies before the age of 59 ½. The law defines a first-time home buyer as someone who has not owned a principal residence in the last two years.
You can also take a loan from your 401(k), either the lesser of $50,000 or half of your vested account balance. No taxes are due on these funds, but they are loan which you are required to repay.
Federal Housing Authority (FHA) Loans The Federal Housing Administration, generally known as FHA, offers mortgage insurance on loans made by FHA-approved lenders throughout the U.S. An arm of the U.S. Department of Housing and Urban Development (HUD), the FHA insures mortgages on single family and multifamily homes, including new homes.
For an FHA loan, the down payment is lower than for a conventional mortgage, and credit scores are also more flexible. The minimum down payment is 3.5 percent of the home’s purchase price, which is significantly below the typical 20 percent down.
VA loans are guaranteed by the U.S. Department of Veterans Affairs (VA), and are open to most active-duty military personnel, U.S. military veterans, and surviving spouses who wish to purchase a home. Private and qualified lenders provide VA loans, which have numerous advantages, such as not requiring a down payment or private mortgage insurance.
Delaware is one of the best places to retire in this country, in part because it offers such favorable financial and fiscal terms to retirees. You may want to come visit one of our top retirement communities and learn what lending options might be available to you.