Mental Capacity and Maturity Determine the Minimum Mortgaging Age
A mortgage is a legal contract that allows a person to use his or her property as collateral when borrowing money to pay a debt. In the United States, this person is referred to as a "debtor", "mortgagor" or "borrower." Borrowers are usually individual homeowners, but they can also be businesses or landlords. In order for the state to recognize the legitimacy of a borrower's decision to mortgage his or her property, two dimensions of adult capacity must be met: mental capacity and maturity. Both are reflections of age in the eyes of the law.
Mental capacity is the actual ability to form the legal intent to mortgage one's property. Maturity goes one step beyond mental capacity: it is the reflective ability to personally evaluate one's own legal intentions objectivelyâ€"or at least as objectively as is possible for a "reasonable" human being. Individual states determine the minimum age at which a reasonable person can be held accountable for entering into a legal contract. Consequently, the minimum age at which a person can mortgage property can vary from state to state. Most states will determine their minimum borrower age by the "age of majority," which is the local age at which people are generally considered adults.
"Age of Majority" Varies From State to State
Mostly as a result of the Vietnam War and partially as an anecdotal consequence of the 26th Amendment (which lowered the Constitutional voting age from 21 to 18 in 1971), all fifty states have set 18 as the age at which a person can knowingly enter into a legal contract, such as a mortgage, without parental consent. Mississippi was the last to do so in the late 1980s. While Alabama (19 years old), Colorado (21 years old), Mississippi (21 years old), and Nebraska (19 years old) are the only states that deviate from recognizing 18 as the local age of majority, all four of these "exception" states allow 18-year-olds to enter into legal contracts without parental consent.
While all 50 states and the District of Columbia recognize 18 as the baseline age in which a person can enter into legal contracts, individuals under 18 may still be able to apply for a mortgage through emancipation, marriage, or veteran status. However, these alternatives vary greatly in specific detail from state to state, can be legally complicated, and are sometimes redundant.
Emancipation and Other Alternatives
Many states allow minors to declare themselves "emancipated" from their parents if they 1) are capable of supporting themselves; and 2) no longer live with their parents. Emancipation recognizes minors as adults and generally allows emancipated minors to enter into legal contracts. In most states, a minor can ask a court for emancipation at age 16. However, under very special conditions, a minor may apply for emancipation as early as 15 in Louisiana and even 14 in California.
Many states will also allow a minor between the ages of 16 and 18 to enter into legal contracts without parental consentâ€"if the minor is married.
Most states have also passed legislation allowing war veterans to enter into legal contracts irrespective of age. While the de facto minimum age of military enlistment is presently 18, these laws hearken back to a time when 21 was the Common Law age of majority. The reasoning behind these Vietnam Era laws is that if you’re old enough to kill and die for your county, then you’re old enough to sign a "death vow"... or mort gage as the French would say.
How "Young" Do You Have To Be To Get A Mortgage?
Another way to inquire about age and mortgaging is to ask, "How 'young' do mortgagors need to be?" Ron Isaac, a senior attorney for the Federal Trade Commission in Washington, D.C., recently told the Chicago Tribune that, "The lender cannot deny an elderly person a loan or charge them more because they are old, or because they might die sooner than a young person." Many elderly consumers fear that their age may negatively impact their mortgage appraisal, or even prohibit them from obtaining a mortgage. Isaac, who works for the government agency charged with enforcing the Equal Opportunity Credit Act, assures older potential borrowers that in order for a mortgage to be considered lawful, "The loan has to be based on a person's creditworthiness, not actuarial tables."
Protecting Yourself From Age Discrimination As a Mortgagor
The Federal Trade Commission is the government office that polices non-bank lenders who offer mortgage services. Mortgage discrimination is an important concern of the Federal Trade Commission, as it is charged with enforcing both the Equal Credit Opportunity Act and the Fair Housing Act. Both of these acts passed by Congress protect borrowers from discrimination whether they are applying for a mortgage to purchase a new house, refinancing a place they already live in, or simply need funding to make some necessary home improvements. A mortgage lender cannot discriminate on the basis of age. Of course, in order to qualify for legal recognition as an adult, the applicant for any mortgage must have the state sanctioned adult capacity to contract.
A complete list of unlawful discrimination practices outlined by the Federal Trade Commission includes discrimination in any aspect of a mortgage transaction that is based upon: race or color; religion; national origin; sex; marital status; age (provided the applicant has the capacity to contract); and the applicant’s exercise, in good faith, of the Equal Credit Opportunity Act or the Fair Housing Act.
