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Old 11-29-2015, 02:28 PM   #61
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Originally Posted by NW-Bound View Post
If we are to apply for a mortgage, I think they will demand more proof, and the 1099 would be one. I remember that a poster here got a bit of a problem even though his after-tax cash hoard was a lot larger than the mortgage. Banks did not know how to deal with that, and probably still don't.
It unusual, but the higher up mortgage loan processors & underwriters are familiar with it. We learned about it on our first refi after retiring, ca. 2007.

They want to see something that looks similar to a regular paycheck. Specifically, broker instructions to send you $X/mo from an IRA/401k, and the enough money in that account to support that withdrawal for 3 years. Sometimes (for me, the 2nd refi not the 1st refi) they want to see that money being deposited into your checking account for 2 months. Even back in 2006 that was all spelled out in the FNMA guidelines.

The 1st refi was a hassle until the loan processor found the experienced underwriter to explain it to him. The 2nd & 3rd refi's I knew the magic words to say to the processor, and no problem.

Note that for a mortgage, everybody adheres to the FNMA/FreddieMac guidelines. That's one guideline for every bank.
For Credit cards, etc. each bank sets its own guidelines.
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Old 11-29-2015, 06:19 PM   #62
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Originally Posted by rayvt View Post
They want to see something that looks similar to a regular paycheck. Specifically, broker instructions to send you $X/mo from an IRA/401k, and the enough money in that account to support that withdrawal for 3 years. Sometimes (for me, the 2nd refi not the 1st refi) they want to see that money being deposited into your checking account for 2 months. Even back in 2006 that was all spelled out in the FNMA guidelines.

<snip>.

Note that for a mortgage, everybody adheres to the FNMA/FreddieMac guidelines. That's one guideline for every bank.
For Credit cards, etc. each bank sets its own guidelines.
This is consistent with what I found; I told them we get $X per year form the investments and they asked for proof of what we were withdrawing every month. Since it was taken out in irregular chunks over the previous 12 months, it wasn't what they were looking for and it didn't fit into the neat little boxes in the FNMA/Freddie Mac guidelines. We were only one year post-retirement, so it was a relatively short track record.

We ended up with a 3% fixed rate on 15 years, so I doubt we'll want to refinance, but I can see wanting an HELOC at some point. It was a handy way to smooth out major bumps such as a car purchase here and there. Starting in January, I'm going to leave a standing order with the brokerage to just send us a nice, even $X per month so we can make the bank happy if we want to borrow again.
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Old 11-30-2015, 11:33 PM   #63
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I got turned down in Aug- I was trying to reap the rewards of a travel card. Filled out the app truthfully, I currently have no income, but am living off of my savings.
Told them that too. (I ER'ed last year) I had an 825 credit score, NO DEBT AT ALL, an impeccable payment history over the last 35 years.

There was no place on the application to discuss savings or retirement accounts or balances. I discussed this with the bank representative. They turned me down for lack of "income." To add insult to injury, the rejection brought my credit score down to 796.

What's in my wallet? Mostly cash.
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Old 12-01-2015, 02:31 AM   #64
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As I stated in an earlier post a new rule introduced by Freddie Mac allows retirement assets to be used to qualify for a mortgage. A certain percentage of retirement assets are used for qualification so a $1 million portfolio will provide a additional 24K of annual income.

Buying a home in retirement
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Originally Posted by rayvt View Post
It unusual, but the higher up mortgage loan processors & underwriters are familiar with it. We learned about it on our first refi after retiring, ca. 2007.

They want to see something that looks similar to a regular paycheck. Specifically, broker instructions to send you $X/mo from an IRA/401k, and the enough money in that account to support that withdrawal for 3 years. Sometimes (for me, the 2nd refi not the 1st refi) they want to see that money being deposited into your checking account for 2 months. Even back in 2006 that was all spelled out in the FNMA guidelines.

The 1st refi was a hassle until the loan processor found the experienced underwriter to explain it to him. The 2nd & 3rd refi's I knew the magic words to say to the processor, and no problem.

Note that for a mortgage, everybody adheres to the FNMA/FreddieMac guidelines. That's one guideline for every bank.
For Credit cards, etc. each bank sets its own guidelines.
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Originally Posted by audreyh1 View Post
No, no credit company/bank has your IRS documents (hacking not counted). But they may request an IRS transcript (the official IRS version of your tax filing) as proof of income.
Why Mortgage Lenders Want Tax Returns | Bankrate.com
Good info for retirees who want to check out a mortgage.

For run-of-the-mill credit, travel, or store cards to get some rewards, any reasonable number I gave them based on our actual expense - and conforming to FIRCalc 30-year run I might add - was accepted without any question. I believe that for smaller credit limits of $10K-20K, the income info is secondary to the personal credit score.
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Old 12-01-2015, 10:18 AM   #65
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After I retired I wanted to get a HELOC in place from my bank where the mortgage is held. I had over 80% equity at that time. They wouldn't accept copies of our pension checks or tax return. They wanted a letter from our ex-mega. Several phone calls with ex-mega got us no where. We only wanted a small HELOC to use for emergency fund. When the bank learned that, they said we could have a LOC for that amount. We said fine. We later got an offer from the same bank for a free re-fi. When we checked, they wanted the same type of information. We dropped that saying well you offered us.
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Old 12-01-2015, 10:32 AM   #66
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Originally Posted by Ticker View Post
I got turned down in Aug- I was trying to reap the rewards of a travel card. Filled out the app truthfully, I currently have no income, but am living off of my savings.
Told them that too. (I ER'ed last year) I had an 825 credit score, NO DEBT AT ALL, an impeccable payment history over the last 35 years.

There was no place on the application to discuss savings or retirement accounts or balances. I discussed this with the bank representative. They turned me down for lack of "income." To add insult to injury, the rejection brought my credit score down to 796.

What's in my wallet? Mostly cash.
What was on last year's tax return? So low you didn't pay any taxes?
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Old 12-01-2015, 10:37 AM   #67
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This is consistent with what I found; I told them we get $X per year form the investments and they asked for proof of what we were withdrawing every month. Since it was taken out in irregular chunks over the previous 12 months, it wasn't what they were looking for and it didn't fit into the neat little boxes in the FNMA/Freddie Mac guidelines. We were only one year post-retirement, so it was a relatively short track record.

We ended up with a 3% fixed rate on 15 years, so I doubt we'll want to refinance, but I can see wanting an HELOC at some point. It was a handy way to smooth out major bumps such as a car purchase here and there. Starting in January, I'm going to leave a standing order with the brokerage to just send us a nice, even $X per month so we can make the bank happy if we want to borrow again.
Each Jan I move a year's worth of income from the brokerage into a high yield savings account, then have a monthly deposit made to our bank checking account. I wonder if this would be sufficient. Unfortunately, I reduce it some months when our expenses aren't that high. Maybe I should leave it perfectly steady, then just send back the excess funds at the end of the month.

I wonder if it matters whether it comes from the brokerage or some other financial institution?
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Old 12-02-2015, 08:37 AM   #68
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Each Jan I move a year's worth of income from the brokerage into a high yield savings account, then have a monthly deposit made to our bank checking account. I wonder if this would be sufficient.
I'm guessing not.
1. That account doesn't have enough money to sustain 3 years worth of withdrawals.
2. It's a little bit too transparent. Even though financially withdrawing money from a brokerage account is equivalent whether done in one lump sum (which is then broken down into monthly sums) or simply monthly sums --- it looks different to them.
3. Even though you are doing it legit, fraudsters could do the same thing, just shuffling the same money back and forth between saving & checking accounts. Even cycle it through 4 or 5 accounts to further obscure the facts. Pretty soon there would be 99 people playing this money-float game for every 1 person like yourself doing it legit. The only way a bank can be sure that you aren't playing this game is to look at just one account --- like a brokerage account with a 6 or 7 digit sum.

Quote:
I wonder if it matters whether it comes from the brokerage or some other financial institution?
From what I was told, they are looking for a balance in some mainstream financial institution, like stock broker or insurance company or bank, and a 2-3 month history of steady paycheck-like withdrawals and/or a written letter (and confirmation) of instruction for that institution to send you $X/mo.
My broker, one a year they send me a letter saying "This confirms your instructions to send you $X/mo from your account. Unless you direct otherwise, we will continue doing so."

Lenders understand employment and regular paychecks. Your typical loan processor & bank manager & loan underwriter have lots of personal experience with weekly paychecks, and ZERO experience with having a $2,000,000 brokerage account and "paying" yourself whatever you want whenever you want.

The closer your finances look like what they are familiar with and accustomed to, the more favorably they'll look at your loan application. If you want the loan, you need to make them comfortable. And you need to avoid looking to them to be fast-shuffling money around. They got scammed big-time by people with things like stated-income loans, and they don't want to repeat that. If they relax their vigilance, con-men will take advantage of them.

FWIW: On one refi, the bank wouldn't accept a 6 digit balance in a regular brokerage account, but they would accept a (smaller) 6 digit balance in a brokerage IRA. That made no sense, so I asked why. The explanation was "You could take all your money out of the (regular) account the day after the loan closes, and then how would you make the payments?" I pointed out that I could take all the money out of the IRA account, too.
Their response, "That's different. One account is for retirement and the other isn't."

A 6-7 digit account is so far out of their ken that you might as well be discussing the finer points of ancient Crete Linear-B. Give them the info they want in the form that they want. They have the gold, so they make the rules.
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Old 12-02-2015, 08:46 AM   #69
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Well, I was wondering whether the monthly steady transfer from one bank to another would be enough.

I may have to rethink this, although our annual income as reported to the IRS is substantial and has been for many years.

We're not planning on a loan or mortgage any time soon - but you never know.....

Probably not worth the hassle. I manage cash flow to get the best rate I can on short term funds while we use them up. The brokerage doesn't offer 1% rates on their money market funds.
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Old 12-02-2015, 09:04 AM   #70
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We only wanted a small HELOC to use for emergency fund. When the bank learned that, they said we could have a LOC for that amount. We said fine.
I wouldn't be happy with that as an alternative. The interest rate would be lower on the HELOC since it's secured by the equity in your house. Interest on the HELOC is also tax-deductible (with some restrictions).

We're going to be signing the paperwork to have a consistent amount deposited monthly from the brokerage account to my checking account starting January 1, which should smooth the way for future credit applications.
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Old 12-02-2015, 09:16 AM   #71
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If any credit card company required a copy of my tax return before they would issue me a credit card, I would not be getting a card from them. A mortgage is a different story, but no way Im doing that for a credit card.
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Old 12-02-2015, 10:29 AM   #72
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I got denied Capitalone MasterCard in Canada while I could get Amex, but this is because I moved to Canada recently and I have no credit history here. I have 800+ FICO score in the U.S. but that evidently does not matter. BTW my credit limit on my AMEX is $2000 so I am too afraid to use it. I have bank accounts I opened at TD Bank before my move and I acquired a credit card then and they just raised my limit from $1000 to $5000 so I do use that one. I have a US Capitalone Venture card also ($18K limit or something like that) and I will have to keep that until I establish credit here. Just out of curiosity I checked my credit score in Canada (with the first month free deal) and its in the mid 600's so far. I have had credit in this country for 11 months. I think I need about two more years.


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Old 12-02-2015, 07:06 PM   #73
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Well, I was wondering whether the monthly steady transfer from one bank to another would be enough.
The banks said no for us and the credit unions said yes. One CU didn't even need the transfers. They just took a look at our balances to make sure we had enough to withdraw three years of living expenses, including any mortgage or HELOC payments.
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