53 & 54yo DINKs leaving Megacorp end of year RE - Are we also FI?

[daylatedollarshort]

The two credit unions we belong to both will consider financial assets, not just income for retiree mortgages. We refinanced our current mortgage when rates dropped after we stopped working full time and at one time even pre-qualified for an investment property, though we didn't end up buying one.

One CU just looked at financial assets and the other CU wanted to see 3 months of transfers from a savings to checking account they could count as "monthly income".

[Diver]

Thanks, molof. As I understand it, in 2011, Freddie Mac changed the rules to allow lenders to use retirement accounts to qualify seniors and others for low-rate, conforming conventional mortgages (there are specific rules and a formula in the links below). I just read about it this year and was surprised. It works for refis as well. They consider about 70% of retirement account balances and most banks require 30% downpayment. They also say the rules have always allowed SS, interest and dividends. It changed our plan on how to pay for our next house. Before, our plan was to take a tax hit after 591/2 and take some money from our IRA to add to our bonds.

Does anyone on the board know of someone who has qualified for a mortgage under these rules?

Here are some links with the specifics:
Using Financial Assets to Qualify for a New Mortgage - Freddie Mac
Use Your Nest Egg to Qualify for a Mortgage-Kiplinger
How to Use Your Nest Egg to Qualify for a Mortgage - DailyFinance

[Diver]

Thanks, daylatedollarshort! I just posted about a 2011 change in the rules at FreddieMac that allowed lenders to count retirement account assets to qualify for conventional mortgages. I included links to some articles explaining in more detail, one from FreddieMac. I think the links triggered a review by the Mods, but hopefully it will post here soon for anyone else that finds it useful. I just found about about it this year myself and was surprised. Great to hear from someone who actually went through the process and qualified using their retirement assets under what I assume were these rule changes for lenders.

[FreeBear]

Congrats Diver on your ER and impending DH's ER!

Seems like you've spent a fair amount of time on the financial side and received extensive comments, so I don't have much to add. Just playing devil's advocate, what is the lifestyle backup plan if you or DH decided that extensive overseas living and travel is not for you? If you need a real home base in the US (say $250K house for half the year) AND still want to travel for a few months, it could get expensive.

Have you guys both spent tons of time overseas in the past or is this an entirely new lifestyle you would like to check out? Sorry, you've already addressed this somewhere...

I admire you guys and your zest for travel. I spent a fair amount of time on the Pacific Rim on business. Of course, business travel is a different animal... Still, we've become homebodies since ER this year. We are very active outdoors, but mainly locally.

You are both wise to get out of the rat race while still young enough to be active. It's great you have each other to travel with. Happy trails!

FB

[omni550]

Quote:

Originally Posted by Diver Thanks, molof. As I understand it, in 2011, Freddie Mac changed the rules to allow lenders to use retirement accounts to qualify seniors and others for low-rate, conforming conventional mortgages (there are specific rules and a formula in the links below). I just read about it this year and was surprised. It works for refis as well. They consider about 70% of retirement account balances and most banks require 30% downpayment. They also say the rules have always allowed SS, interest and dividends. It changed our plan on how to pay for our next house. Before, our plan was to take a tax hit after 591/2 and take some money from our IRA to add to our bonds. Does anyone on the board know of someone who has qualified for a mortgage under these rules?

Diver,

I'm not familiar with the Freddie Mac^^ ruling.

I retired 8+ years ago and own my primary residence free & clear. In March this year, I purchased a second home (a condo worth approximately the same as my primary residence) in Florida. I put 30% down and got a mortgage for the balance. My retirement assets are what underwriting reviewed prior to approving the loan (as I receive a very small pension).

omni

[Diver]

FreeBear, you ask some good questions. We have traveled outside the US for years, albeit for 2 weeks at a time, and mostly in this hemisphere. Travel is a bit of a passion. Both sets of parents are immigrants, so we both grew up around folks from different cultures. That said, we realize that what we have planned may turn out not to our liking in the end, and we may come back much sooner than planned "with our tails between our legs". If so, we plan to rent in places in the US where we think we might like to live long term, pick a place and eventually buy something for around $250k and still do some budget travel as we are able on a more limited basis. Right now we feel like we want to travel extensively, but you are right that we need a Plan B. Most people that hear our plans do ask us what is Plan B if we decide the nomad lifestyle is not for us, so we have thought about it a bit, just not sure where exactly we would settle. With that in mind, we are storing our core belongings for a year just in case.

[daylatedollarshort]

Quote:

Originally Posted by Diver FreeBear, you ask some good questions. We have traveled outside the US for years, albeit for 2 weeks at a time, and mostly in this hemisphere. Travel is a bit of a passion. Both sets of parents are immigrants, so we both grew up around folks from different cultures. That said, we realize that what we have planned may turn out not to our liking in the end, and we may come back much sooner than planned "with our tails between our legs". If so, we plan to rent in places in the US where we think we might like to live long term, pick a place and eventually buy something for around $250k and still do some budget travel as we are able on a more limited basis. Right now we feel like we want to travel extensively, but you are right that we need a Plan B. Most people that hear our plans do ask us what is Plan B if we decide the nomad lifestyle is not for us, so we have thought about it a bit, just not sure where exactly we would settle. With that in mind, we are storing our core belongings for a year just in case.

We used to watch House Hunter International for ideas. We didn't end up moving, but it was fun for awhile to consider our options.

If your parents are immigrants, and you have not done so already, you might be able to get dual citizenship.

[Diver]

Thanks, Daylatedollarshort! We watch House Hunters Intl as well - fun to dream about different places! I am eligible for dual citizenship in the UK through my Mom, and I plan to apply soon, which will let us both stay in EU countries for more than 90 days, just in case we find somewhere there that we want to stay for awhile. DH's country of origin does not allow dual citizenship. Great suggestion, btw.

[Letj]

Quote:

Originally Posted by Diver Thanks, Daylatedollarshort! We watch House Hunters Intl as well - fun to dream about different places! I am eligible for dual citizenship in the UK through my Mom, and I plan to apply soon, which will let us both stay in EU countries for more than 90 days, just in case we find somewhere there that we want to stay for awhile. DH's country of origin does not allow dual citizenship. Great suggestion, btw.

Dual citizenship is wonderful since you will be eligible for health care in the UK.


Sent from my iPhone using Early Retirement Forum

[StuckinCT]

I really like www.ultimateretirementcalculator. com for modeling retirement income. This can show you what your cash flow will look like before and after when social security kicks in- you can play around with taking it at 62 versus 67 etc to see what it looks like and to see what the long term impact will be of living only on investment income for a while. I also like that it allows you to choose your tax rate. H&R block has a free tax calculator to figure your federal tax and you can just figure what the average rate is from there. On a 60/40 portfolio I think 6.66% is probably about the right return assumption. It appears that you will be living very close to a sustainable withdrawal rate but you might want to vet it a little further to measure tax impact and social security long term. If you have longevity it can pay to delay social security but often the inflation adjusted NPV of full benefit versus early retirement is not that large, but you might double check it.