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Is it easy to get a Home Equity Line after FIRE before hitting 60
Old 03-19-2018, 09:15 AM   #1
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Is it easy to get a Home Equity Line after FIRE before hitting 60

I wanted to ask those who have already retired early around 50 - 59 years old .. and then decided to apply for a home equity line after you quit work and your house was already paid in full. Was it easy or difficult? I know most would advice to get an equity line before retiring, but thatís not what this is. Thanks.
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Old 03-19-2018, 09:18 AM   #2
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We did. The amount was limited by our reduced income.
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Old 03-19-2018, 09:52 AM   #3
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PenFed was happy to give me one, and I had already been retired for many years.
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Old 03-19-2018, 12:14 PM   #4
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Not retired but lending is tough these days. Banks are asset shy, and W2 dependent.
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Old 03-19-2018, 01:21 PM   #5
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I was approved for $150K line of credit, based on SS and Annuity income. They were not very interested in other assets such as iRA's.
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Old 03-19-2018, 02:31 PM   #6
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I applied last year, as I plan to retire this year. I told them upfront what I was doing and they were fine with it.
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Old 03-19-2018, 06:57 PM   #7
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I found credit unions more agreeable than banks in counting investment income for qualifying. They are really all geared to monthly "income". Even if that is a transfer from savings to checking it seems to make them happy. Like they will count your Toys R Us pay check deposit as income for a 30 year loan but not your Social Security if you haven't started collecting SS yet. It is not a logic based system, not logical for many ER folks anyway.
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Old 03-20-2018, 07:43 PM   #8
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I got a big HELOC from USAA after I had been retired quite a few years and I was well over 60. The wouldn't give me as much as I wanted (I think the absolute max was 70% of appraised value. I owned the home outright.) The reason had nothing to do with my income (which is steady with a good pension and my and my wife's SS). It was because I had never borrowed that much before. My previous mortgages had all been relatively low compared to the value of the houses because I made larger down payments than I had to to keep the payments lower. So here I was with a nice income stream and a pretty good portfolio and they didn't want to lend me the full amount because I'd been financially responsible and a conservative borrower in the past. Damned if you do....
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Old 03-20-2018, 08:00 PM   #9
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How about credit in general in ER? Letís say you got $1MM in investments and $80k yearly in an annuity?
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Old 03-21-2018, 08:25 AM   #10
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I looked into this a year or two ago. Apparently there are ways for the HELs to be underwritten taking into borrower ASSETS in addition to the more usual income method.

You may wish to search on this for further info.

Not all loan originators may be aware of these less common methods. It would probably be good upfront in the process to understand if the originator has experience in documenting loans underwritten based on assets (not income).

Here are a few links that I found just now that may help your research into this area.


https://www.thestreet.com/story/1222...ot-income.html
http://www.freddiemac.com/blog/homeo...ur_assets.html
http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf

-gauss
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Old 03-21-2018, 09:35 AM   #11
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Quote:
Originally Posted by gauss View Post
I looked into this a year or two ago. Apparently there are ways for the HELs to be underwritten taking into borrower ASSETS in addition to the more usual income method.

You may wish to search on this for further info.

Not all loan originators may be aware of these less common methods. It would probably be good upfront in the process to understand if the originator has experience in documenting loans underwritten based on assets (not income).

Here are a few links that I found just now that may help your research into this area.


https://www.thestreet.com/story/1222...ot-income.html
Use Your Assets - Freddie Mac
http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf

-gauss
Did your bank follow this kind of guidance for a HELOC? It's my understanding that a HELOC isn't goverment-backed, and thus the HELOC rules are whatever the bank decides that they are.

That said, based on my experience with Bank of America, I believe that they have a formula to count assets in their process. I'm working with a credit union right now, and they won't count assets in determining what I'll be eligible for.

If the bank says that a person's income isn't sufficient, that may be solved by just upping your monthly IRA/401k distributions. I know of one case where that was all that was necessary.
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Old 03-21-2018, 12:55 PM   #12
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I never actually opened up a loan. I just wanted to be assured that I would be able to in the future once the earned income stops.

I am not sure if HELOCs are packaged and resold to the likes of GinneMae/FannieMae/FredieMac like other mortgage products are.

As suggested, I was able to determine to my satisfaction that I would likely be able to open up an asset based loan with home as collateral in the future if I needed to and there was no rush to do it now.

Some stories here about individuals who had opened up HELOCs and subsequently fraudsters eventually obtained access to the HELOC funds with borrower left to deal with the issue.

That put a bit of a fear in me in that I didn't want to put at risk a paid of, primary residence if I didn't need to.

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Is it easy to get a Home Equity Line after FIRE before hitting 60
Old 03-21-2018, 04:12 PM   #13
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Is it easy to get a Home Equity Line after FIRE before hitting 60

I just signed the dotted line on one today. Thought it would be easy as advertised online. Should have just went down to the bank to get it as I had to make 2 trips down there to get it completed anyways. I have pension income so it was a breeze getting it financially. Doing the paper work hassle was the only pain about it.
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