Home financing for active retirees is a complicated process, especially in today's financial environment.
Generally speaking, fixed rate mortgages, or FRMs, are a better option for retirees who are on a single-source fixed income. The decision to get a 30-year or a 15-year FRM depends entirely on the level of that income. A retiree should not have more than 30-35% of his or her monthly income going towards the mortgage payment, as the "other" costs of living can add up quickly, and funds should be kept available for any increases in medication or hospitalization expenses. The fixed rate mortgage helps to prevent the retiree from any "payment shock" in the future which may lead to a situation where he is unable to continue making payments.