Can you get a mortgage loan when retired?

[tmm99]

Has anyone got a mortgage loan to purchase a home after retirement (while unemployed)?

Is it possible to do this?

I don't want to buy a house now, but I want to when I retire. I still don't know where I want to end up yet. I am thinking of living in a few areas (probably months at a time) and decide a place and then buy, but I don't want to pay in full.

Any comments greatly appreciated.

tmm

 

[ziggy29]

If you have a guaranteed pension and Social Security, you probably can. If you can show the lenders brokerage statements that reflect a balance well into the six figures or higher to show you have a reliable income stream for decades, you probably can.

Failing that, it might be tough, at least in the new lending environment. You may have to find a mortgage lender/broker who will do some good old-fashioned underwriting, though.

 

[brewer12345]

There are also what are called "pledged asset mortgages" where you use your brokeragge account assets as the collateral and the lender looks the other way on a bunch of other things. But I suspect these are expensive and complicated.

 

[limpid lizard]

I mentioned in another thread. I have been having difficulty getting a 25K mortgage on a 200K piece of property. I have 175K down and while my brokerage account statements show me to be well into the 6 figure range, nobody even wants to look at them. The only interest they show is in the amount of fixed income I have, and I have no fixed income. 3 out of 4 lenders said no, and the 4th wanted $100 to give me an answer. My credit score is quite high, but that did not matter either.

Now when my daughter and I were looking at dividing a piece of property a month or so ago, they were practically begging to give me 305K with no down. She has income and I have assets.

 

[FinanceDude]

I mentioned in another thread. I have been having difficulty getting a 25K mortgage on a 200K piece of property. I have 175K down and while my brokerage account statements show me to be well into the 6 figure range, nobody even wants to look at them. The only interest they show is in the amount of fixed income I have, and I have no fixed income. 3 out of 4 lenders said no, and the 4th wanted $100 to give me an answer. My credit score is quite high, but that did not matter either.

Now when my daughter and I were looking at dividing a piece of property a month or so ago, they were practically begging to give me 305K with no down. She has income and I have assets.

You need a different lender, one with a brain. A $25K mortgage on a $200K property? That's a no-brainer, the bank is being idiots........

 

[OAG]

I have never found it hard to get a mortgage (set one up last year) or a car loan but we do have Army Retired Pay and DW SS coming in. I guess they figure those things will ensure we can and will repay (even tho I do not think they could go after SS or Retired Pay; but I do pay my bills, usually early too).

The HELOC we set up is a dormant "emergency" fund - which costs nothing to set up or service so it seemed like a prudent thing to do. It took about 10 days to establish from start to finish and we did it remotely from the lender and never even spoke to a person.

 

[FinanceDude]

The HELOC we set up is a dormant "emergency" fund - which costs nothing to set up or service so it seemed like a prudent thing to do. It took about 10 days to establish from start to finish and we did it remotely from the lender and never even spoke to a person.

Very smart, I think it is a financial must to do before one retires,

 

[Hamlet]

In my experience, banks set lending rules and have people mindlessly follow them. They don't do much thinking, so anything out of the ordinary (like someone without a 9-5 job) throws them for a loop.

When I was getting my mortgage, the bank took issue with 5k that my mother had given me from my grandfather's estate. They wanted something saying it was a gift and not a loan. When I asked them why it mattered, since I had a couple hundred thousand in assets, they seemed confused.

"Imagine that the 5k wasn't there at all. Would I still qualify for the loan? Ok, then. Why are we still talking about this?"

You need a different lender, one with a brain. A $25K mortgage on a $200K property? That's a no-brainer, the bank is being idiots........

 

[FinanceDude]

In my experience, banks set lending rules and have people mindlessly follow them. They don't do much thinking, so anything out of the ordinary (like someone without a 9-5 job) throws them for a loop.

When I was getting my mortgage, the bank took issue with 5k that my mother had given me from my grandfather's estate. They wanted something saying it was a gift and not a loan. When I asked them why it mattered, since I had a couple hundred thousand in assets, they seemed confused.

"Imagine that the 5k wasn't there at all. Would I still qualify for the loan? Ok, then. Why are we still talking about this?"

Banks have no sense of humor. However, back in the day GMAC was easy to manipulate........

 

[limpid lizard]

If I really cared, I would probably put more effort into finding a lender. It almost makes more sense to just take the money from investments and not have to pay the fees the loan would cost.

I have a signature line of credit tied to my checking account with the bank that wanted the $100 before they would give me an answer. When they asked for the 100, I asked what the odds were of getting the loan. I was told, "Not good." I asked if that was so, why should I give them money for the answer in writing.

Yet they will loan me money on a signature. They must be running scared of mortgage regulation.

 

[cute fuzzy bunny]

No problems whatsoever, although all I've gotten is credit cards and HELOC's, so far I havent tried a primary mortgage. Twice i've gotten helocs for six figure amounts and half the property value with nary a glitch and penfed just gave me a balance increase to 40,000 on my penfed visa over the phone, no paperwork.

I would think that having shown considerable assets and your last 5 years worth of 1040s showing a reasonable, persistent and present income stream you might be okay. Might be tough over the next 12-18 months because of the current situation.

 

[laurence]

Very smart, I think it is a financial must to do before one retires,

WARNING! Learn from my folly! My HELOC was recently frozen "due to our poor lending practices ERRR due to the mortgage crisis and housing downturn". So banks are happy to let you use that HELOC unless times are tough, then they may just screw you. After reading the fine print, it seems they can freeze it at any time, including if they find out you lost your job, missed a payment on something else, etc. So a HELOC may serve as a line for emergency cash, it may not be available just when you need it. Better to just have some more cash in your money market.

(FYI - credit over 800, good income etc., they still froze it)

 

[tmm99]

Well, thanks everyone for the posts.
I am still a bit confused though...

So, nobody posted so far has gotten a mortgage loan (not HELOC) after retirement (with no job)... One person said he has had a hard time getting one. Others said it was probably possible to get one if you have a big asset... Hmm....

In a way, I won't be needing this information for another 10 years or longer, but I was really really curious about this (I still am) - if anybody has gotten a mortgage loan with no job and how difficult it was. It sounds difficult from what limpid said...


tmm

 

[OAG]

WARNING! Learn from my folly! My HELOC was recently frozen "due to our poor lending practices ERRR due to the mortgage crisis and housing downturn". So banks are happy to let you use that HELOC unless times are tough, then they may just screw you. After reading the fine print, it seems they can freeze it at any time, including if they find out you lost your job, missed a payment on something else, etc. So a HELOC may serve as a line for emergency cash, it may not be available just when you need it. Better to just have some more cash in your money market.

(FYI - credit over 800, good income etc., they still froze it)

That is why I use Credit Unions (much more conservative lending policies; due to who owns the CU - Members). My particular CU of choice is the 3d largest in USA (PFCU). Asked the question the other day (since I may be writing a high 5 figure check in the near future) and the response was "fine, do you think you will need to raise the loan amount?". BTW I do not have a job (retired) and I DO NOT miss payments on my obligations.

 

[saluki9]

No problems whatsoever, although all I've gotten is credit cards and HELOC's, so far I havent tried a primary mortgage. Twice i've gotten helocs for six figure amounts and half the property value with nary a glitch and penfed just gave me a balance increase to 40,000 on my penfed visa over the phone, no paperwork.
be tough over the next 12-18 months because of the current situation.

Nope, no problems.

We've helped tons of retired folks get mortgages recently with no problem. As you would expect there is more underwriting now than in the past.

It's also interesting (shocking I know) that the loan officers actually want to see the client's entire brokerage statement instead of just the first page like they used to. Still have not had to pledge assets for anybody on a first mortgage.

 

[cute fuzzy bunny]

WARNING! Learn from my folly! My HELOC was recently frozen "due to our poor lending practices ERRR due to the mortgage crisis and housing downturn". So banks are happy to let you use that HELOC unless times are tough, then they may just screw you. After reading the fine print, it seems they can freeze it at any time, including if they find out you lost your job, missed a payment on something else, etc. So a HELOC may serve as a line for emergency cash, it may not be available just when you need it. Better to just have some more cash in your money market.

(FYI - credit over 800, good income etc., they still froze it)

That happened to my neighbor when he wrote me a $2k check for his half of the fence work.

I'd think if you had a $100-200k heloc on a paid off house worth 450-550+ you'd probably have less of a problem.

Maybe another good reason to pay off the mortgage?

 

[Art G]

You can use your investment assets to borrow from, and depending on the size of the account, the rate can be well below prime. There are some stipulations to be aware of though, such as it's a short term loan that would have to be reviewed after a few years, but it's definitely available.
I can set up a loan to be either vs. the prime rate or LIBOR.

 

[Art G]

That is why I use Credit Unions (much more conservative lending policies; due to who owns the CU - Members). My particular CU of choice is the 3d largest in USA (PFCU). Asked the question the other day (since I may be writing a high 5 figure check in the near future) and the response was "fine, do you think you will need to raise the loan amount?". BTW I do not have a job (retired) and I DO NOT miss payments on my obligations.

Just a thought, but I'm thinking, in a time of panic, a credit union would be more likely to have a "run on the bank" then a bank themselves. More regulations in place. JMO.

 

[OAG]

Just a thought, but I'm thinking, in a time of panic, a credit union would be more likely to have a "run on the bank" then a bank themselves. More regulations in place. JMO.

Has not happened in the past 30 years, to my knowledge. But if it did, the accounts are insured just like FDIC by the NCUA. Of course "time of panic" could mean a lot of things and anything is possible.

 

[harley]

I got a large mortgage last year. We don't have an income, but we've got plenty of assets. But what I think got us the loan was a large AGI on our 2006 taxes. We were dealing with an inheritance which required some assets being liquidated, so there was a large AGI and a large tax hit.

This year we will have a very low AGI, especially after the mortgage deduction. I suspect if we applied for the same loan next year we'd have a harder time getting it. But we have excellent credit and could probably do it, after jumping through a few more hoops.

Harley

 

[OAG]

But what I think got us the loan was a large AGI on our 2006 taxes. We were dealing with an inheritance which required some assets being liquidated, so there was a large AGI and a large tax hit. Harley

Really none of my business but I am curious why the basis on the inheritance property was not able to be stepped up thereby negating the tax hit?

 

[harley]

Really none of my business but I am curious why the basis on the inheritance property was not able to be stepped up thereby negating the tax hit?

Mostly due to an annuity that had a large after-death increase. We had to cash it out within 5 years after death, and I (incorrectly) thought the market was peaking and about to go way down. So I decided to liquidate the whole thing at once to get maximum value, and just pay the taxes.

Sometimes I'm good, and other times just unlucky

Harley

 

[laurence]

Re: HELOC A lot of terms are getting mixed up here, let me be clear. My point was no matter what your upstanding citizen status is, they may freeze it anyway. I never missed a payment either, they just froze everybody. If you think that won't happen to your financial institution, fine, but the bottom line is a HELOC isn't a guaranteed account, and the risk of not having it when you need it is real. I could have maxed out my HELOC and not been anywhere near out of equity, even with the downturn. People on this board have "written off" Social Security and "don't count it in their portfolio" but yet some how a HELOC is gold? I'm just saying, caveat emptor.

Back to OP, my parents got a mortgage while retired. It was some additional paperwork regarding assets but otherwise was fine.

 

[Achiever51]

Re: HELOC A lot of terms are getting mixed up here, let me be clear. My point was no matter what your upstanding citizen status is, they may freeze it anyway. I never missed a payment either, they just froze everybody. If you think that won't happen to your financial institution, fine, but the bottom line is a HELOC isn't a guaranteed account, and the risk of not having it when you need it is real. I could have maxed out my HELOC and not been anywhere near out of equity, even with the downturn. People on this board have "written off" Social Security and "don't count it in their portfolio" but yet some how a HELOC is gold? I'm just saying, caveat emptor.

Back to OP, my parents got a mortgage while retired. It was some additional paperwork regarding assets but otherwise was fine.

We got a letter from Chase just last week about our HELOC -- never missed a payment, was very careful in how we used these funds, have a excellent credit score, yada yada yada. Chase froze our account from any additional draws citing the general drop in real estate values in my STATE. Says we can appeal, but the procedure is cumbersome.

BTW, I know several folks who were successful in getting mortgages post-retirement. More scrutiny of assets, but beyond that, no problems.

 

[free4now]

Before I retired a few years ago I looked into how hard it would be to get a mortgage without a w2. My conclusion was that it happens all the time and should not be a problem. Today, I'm sure things are tighter, but it should still be possible.

As to the person who had trouble getting a $25k loan, I suspect the issue there is that a 25k loan doesn't generate the fees that would motivate the broker to nudge it through underwriting. It if were a $100k or $200k loan it would be much easier.