A Great Credit Score, but She Can’t Get a Mortgage

Despite solid financial track records, many older Americans have a hard time refinancing because of their mortality risks and lower retirement incomes.

Molly Stuart, who lives in Sacramento County, Calif., hoped to refinance the home she had bought 18 years earlier, but her application was denied.Credit…Andri Tambunan for The New York Times

Published April 8, 2023Updated April 11, 2023

In late 2019, Molly Stuart’s contract ended at the community college where she worked. “Normally, I’d just get a new job, but then Covid happened,” she said. So she collected unemployment for awhile, then retired.

In 2021, hoping to give herself some financial breathing room, she tried to refinance the three-bedroom ranch house she had bought 18 years earlier on an acre of land in Sacramento County, Calif.

“I’m an extremely good risk,” said Ms. Stuart, 60, a lawyer. She had a 30-year work history and a credit rating above 800. Her remaining mortgage was $102,000, but she estimated that the house was worth about $500,000. She had already paid off the mortgage on another house in Sacramento, which she rented out.

But her mortgage company denied her application. “I didn’t qualify for a refinance because I didn’t have enough income,” she said. “It was extremely frustrating.”

higher credit ratings than any other age cohort, yet recent studies have shown that they’re substantially more likely to be rejected for most kinds of mortgages. That raises barriers for older Americans hoping to renovate or retrofit their homes, or to extract home equity as a buffer against medical expenses, widowhood or other crises.

Much of older adults’ wealth is tied up in real estate. Among homeowners aged 65 to 74, home equity represented about 47 percent of their net worth in 2019, according to federal data; among those over 75, it was 55 percent. Among Black homeowners over 62, it accounted for almost three-quarters of their net worth.

But a house is not a financial asset, noted Lori Trawinski, director of finance and employment at the AARP Public Policy Institute in Washington. “It only turns into a financial asset if you take out a loan or you sell it.”

Getting that loan may be harder than owners expect.

analysis of more than 9 million mortgage applications collected through the Home Mortgage Disclosure Act from 2018 to 2020. He found that rejection rates rose steadily with age, particularly accelerating for applicants over 70.

paid slightly higher interest rates when they took out either refinances or new purchase mortgages.

The study’s methodology controlled for credit scores and property types, as well as economic and demographic factors, said Alicia Munnell, director of the Center for Retirement Research at Boston College, which republished Dr. Amornsiripanitch’s work. “He’s looking at the well-heeled and the less well-heeled. Age is still a factor.”

The federal Equal Credit Opportunity Act has long prohibited discrimination by age, as well as race, color, religion, national origin, sex, marital status, and receipt of public assistance income. Lenders are allowed to inquire about an applicant’s age, but that information may only be used legally under limited circumstances.

Dr. Amornsiripanitch determined, for example, that lenders attributed more than half of their rejections of older applicants to “insufficient collateral.” He speculated that lenders didn’t find those homes to be worth as much as applicants had thought, possibly because older owners occupy older homes, and might have deferred maintenance.

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