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Options Abound For Older Homebuyers

Options Abound For Older Homebuyers

seniorhomebuyers2When it comes to residential real estate, age is often overlooked. Well, more accurately, old age is often overlooked in favor of news and programs geared toward first time home buyers in Illinois and elsewhere, who are typically on the younger side of the spectrum. However, if news out of the construction market is any indication, older Americans are helping to drive the housing recovery.

Data from the National Association of Home Builders Housing Market Index shows that confidence in senior housing has been on the rise for quite some time. Not only did the index rise 19 points over the past year for the over 55 single family housing market, reaching 46, first quarter data shows that this is the highest level the senior housing index has reached since the inception of the survey in 2008. What’s more, this marks the sixth consecutive quarter for year-over-year improvements.

“Builders and developers for the 55 plus housing sector continue to report increased optimism in the market,” said Robert Karen, chairman of NAHB’s 50+ Housing Council. “We are seeing an increase in consumer demand for homes and communities that are designed to address the specific needs of the mature homebuyer.”

Builder sentiment regarding future sales is also positive, with the index for expected sales over the next six months increasing by 21 points to 53. Fortunately, there’s also good news for the older Americans forecast to purchase these properties.


Program helps retired homebuyers

While becoming a retiree comes with many perks, a limited income isn’t one of them. Buying a home in Illinois is ideal for older Americans who wish to take advantage of ultra-low mortgage rates, but not having a high, steady income that employment can provide creates a challenge. However, according to Christina Boyle, vice president and interim head of single-family sales & relationship management at Freddie Mac, retirement doesn’t have to mean the end of homebuying.

“A little-known change in Freddie Mac’s rules could be a big help to qualifying retiring Baby Boomers and other savvy homebuyers who have limited incomes, but substantial financial assets, for a low-rate conforming, conventional mortgage,” Boyle writes for Freddie Mac’s Executive Perspectives Blog. “The change lets lenders use a significant portion of a borrower’s eligible financial assets to determine whether they qualify for a Freddie Mac mortgage. Although it took effect in the spring of 2011, word has apparently been slow to spread judging by the calls we field from inquiring borrowers and housing professionals.”

Freddie Mac guidelines allow individual retirement accounts (IRAs) and 401(k)s, lump-sum retirement account distributions and proceeds from the sale of a borrower’s business to be used as determining factors in whether an individual is eligible for a home loan.

There are, of course, some rules. Firstly, the assets in an IRA or 401(K) must be in a fully-vested retirement account that is recognized by the Internal Revenue Service. Also, these financial assets must be entirely accessible to the borrower. This means there must not be a withdrawal penalty, and the assets must not already be being used as a source of income.

In addition to Freddie Mac already allowing a lender to issue a home loan using a borrower’s dividends, interest payments, trust distributions and Social Security payments as determining factors, older homebuyers have more options than ever when it comes to obtaining financing for a home purchase.


  1. stacygordon411

    Great to see that you've written on a topic that not many real estate bloggers tend to choose.

  2. The economy needs the baby boomers financial capital to continue sustainable growth. If we can have them start purchasing homes and doing remodeling and upgrading to energy efficient products, our economy as a whole will grow dramatically. They have the stable incomes with SS and retirement plans, so why not invest in the states and our economy?

  3. We work with a lot of buyers who choose our area for retirement due to the weather and low taxes/home prices. Older home buyers are often similar to first time home buyers in that they have limited income. However, a huge advantage for older buyers is that most of our clients either have paid off their current mortgage or have so much equity in it that these assets more than make up for their lesser retirement income.

  4. You know this article and information comes to no surprise. As we all know the younger generation is finding it harder and harder to find work now adays, and without income there is no way to purchase a home. Furthermore the older generation has saved (hopefully) and lived it up for the last 50 years before our country went broke so they should be able to afford to do more.

  5. Most businesses cater mostly to younger generations of homebuyers as they can pay for their home. But this options for older homebuyers is something of an extraordinary news. Older generations have a more stable work that permit them to settle all obligations including houses and properties.

  6. I agree that most real estate is focused on targeting first-time buyers as opposed to those in their retirement. Very interesting post – thanks for sharing =)

  7. Thanks for these pointers! Even buyers in Dallas who want to have property management Dallas should consider these tips. Well-written indeed.

  8. Glad to finally see someone writing about this topic.

    Right now, with mortgage rates soaring to 4.46% making it the biggest jump in 26 years, buying a new home can be incredibly hard for anyone of any age. But now buyers have the option of renting before buying with the "Try It Before You Buy It" feature at PreviewStay.com. We generate the #1 most likely to buy leads in real estate marketing and with our buyers getting the opportunity to try out a home before deciding to buy, we convert upwards of 400% leads higher than typical walk-ins.

    Older home buyers should check out this opportunity so they can have an advantage in this market. http://www.previewstay.com/City.aspx/USA-North_Ca

  9. Mortgages and property selling are huge issues for seniors, and I'm glad to see more coverage on the topic. Is there an address at which I can reach an editor at The Real Estate Bloggers?

  10. Hopefully more baby-boomers/retired will have money to buy a home. A recent survey by AARP Washington found one quarter, or approximately 462,000, of Washington's baby-boomers have less than $25,000 in savings. That's a huge number. The numbers are similar nationwide.

  11. Wow. I really love this post. It make sense to all readers. It give emphasis to that the retiree individual will have the more capacity to purchase a new home compare to the baby boomer nowadays, as what we usually observe that the young of today's generation is find hard to purchase this kind of property because of lack of savings or they don't have a enough strong support of their financial aspect.

  12. Actually, this article is really give justice to what is right thing when it comes to the Homebuyers, Yes of course, the old buyers will have strong budget to purchase a new home for their family, there's nothing to be discuss if there's things are the topic..

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