refinance mortgage after hasty retirement

[phoneguy55]

This whole early retirement roller coaster that I am sitting in the front car of, came on too quickly for me to refinance my 4 year old mortgage down from the current 5.5% rate. Now that I am "unemployed", I wonder how easily ( if possible at all) it would be to refinance such a new mortgage. ( original loan of $155K and current amount still $145K) Even if I pick up some sort of employment, it will not have any longevity that would benefit the re-fi.....would it ?

[bld999]

Quote:

Originally Posted by phoneguy55 This whole early retirement roller coaster that I am sitting in the front car of, came on too quickly for me to refinance my 4 year old mortgage down from the current 5.5% rate. Now that I am "unemployed", I wonder how easily ( if possible at all) it would be to refinance such a new mortgage. ( original loan of $155K and current amount still $145K) Even if I pick up some sort of employment, it will not have any longevity that would benefit the re-fi.....would it ?

If you are married and your spouse pulls down enough to qualify, you might have a shot at it.

My wife & I recently refied 2 rentals, which are harder, of course. Her income clinched it. That and working closely with a local S&L that keeps their loans.
I looked for about 4 months off & on until we got the right noises from a bank.

[misty57]

Do you have a pension? I would think depending on the size, you could qualify on that.

[FinanceDude]

It might be pretty hard, banks like consistent income coming in like you had. Credit rating alone doesn't work these days.........

[Katsmeow]

Look into an asset depletion loan. Talk to a mortgage broker. If you have assets there is a formula that is used to determine how much you can borrow. It is based upon amount of assets and age rather than being based upon income.

[phoneguy55]

I will check on that asset depletion loan. Maybe I need to prove (over time) that the current monthly payment is being met, and lowering it by a few hundred a month would not be a risk. That is one of the many ways I need to lower my monthly bills. The $400 a month SUV, may have to become a little hybrid in the future too, but again getting a loan may be the challenge there also.

[dmdunca44]

My husband and I are retired phone people. We both have pensions (and SS). We have refinanced twice since he retired (the most recent refi was last Nov). We had no problems at all. They wanted copies of our pension letters and our SS statements (along with the usual bank statements and 1040's).

As long as your documented income is enough to make the payments, you should be OK.

[Mulligan]

Quote:

Originally Posted by dmdunca44 My husband and I are retired phone people. We both have pensions (and SS). We have refinanced twice since he retired (the most recent refi was last Nov). We had no problems at all. They wanted copies of our pension letters and our SS statements (along with the usual bank statements and 1040's). As long as your documented income is enough to make the payments, you should be OK.

I refinanced with a pension as my mostly sole income, and it was no problem, also. It seems like we have had threads in the past where asset rich, income poor retirees have struggled to get approval for refi's.

[phoneguy55]

thanks for sharing your experiences,...maybe I will be able to do this. The asset depletion loan option stated above seems like it may be tricky for me. From the few web sites that describe the details, you either need to be borrowing over $300K or be able to put a substantial percentage down. I will do my due diligence, and keep looking and hopefully will be able to find a way. Thanks folks.....

[Katsmeow]

Quote:

Originally Posted by phoneguy55 thanks for sharing your experiences,...maybe I will be able to do this. The asset depletion loan option stated above seems like it may be tricky for me. From the few web sites that describe the details, you either need to be borrowing over $300K or be able to put a substantial percentage down. I will do my due diligence, and keep looking and hopefully will be able to find a way. Thanks folks.....

This may depend on where you live. I was told I did not need to have a loan over $300k (that may be true in some areas or for some programs). Also, I was told I would need to have it be no more than 80% loan to value (which was fine).

For those saying they got loans just fine with a pension -- well, of course you did...you have documented income. The difficulty can be for those who do not have a pension but simply have savings or received a lump sum. That is where the asset depletion loan comes in.

[phoneguy55]

that does seem to be my best hope, so I will pursue that tack for sure. The 80% thing may prevent it though, and paying the loan down to satisfy that requirement will be counter productive also. I may have to just wait a while, but not without exhausting all possibilities first. Thanks again....

[Accidental Retiree]

Can you set enough aside for a 72(t)? That series of payments for 60 months can also work as a documented income stream.

[phoneguy55]

Quote:

Originally Posted by Accidental Retiree Can you set enough aside for a 72(t)? That series of payments for 60 months can also work as a documented income stream.

Hi A.R. ...
I am still formulating a game plan, as this is only day 4. I just met with my CFP, and his advice is (plan 1): get a job to lessen any distribution from the employers 401K or..(plan 2) set up monthly distributions from 401K at 70-80% of last salary, and try to lower bills as much as possible.
I didn't ask whether those distributions would actually be considered a 72T...or just a withdrawal. I have a few months of savings to allow me to not rush into a plan too quickly. Your advice is well taken, though,...if an actual verifiable income stream is needed to do any kind of refi.

Thanks....

[Finance Dave]

Quote:

Originally Posted by dmdunca44 My husband and I are retired phone people. We both have pensions (and SS). We have refinanced twice since he retired (the most recent refi was last Nov). We had no problems at all. They wanted copies of our pension letters and our SS statements (along with the usual bank statements and 1040's). As long as your documented income is enough to make the payments, you should be OK.

I wonder if an annuity statement would be viewed similar to a pension income by the banks? If you can prove that the annuity income will keep coming...would they accept that as income?

[bld999]

"I wonder if an annuity statement would be viewed similar to a pension income by the banks? If you can prove that the annuity income will keep coming...would they accept that as income?"

That's one prime reason to try and work with a local bank and get a view into their underwriting. In cases where people have decent assets and really are responsible, but have a non-job income stream, the big banks that advertise teaser rates and sell everything after origination are not interested.

When you can walk in and talk to somebody and realistically make your case, it's a much better shot. You quickly learn that underwriting is "the same, but different" depending who you talk to. The fanny and freddie group are definately constrained.

[Nords]

Quote:

Originally Posted by Finance Dave I wonder if an annuity statement would be viewed similar to a pension income by the banks? If you can prove that the annuity income will keep coming...would they accept that as income?

Income is income, no matter what kind of stationery the statement is printed on.

I once provided a 1099-R to document my military pension. The lender came back with "Yeah, but how do we know they'll pay you this pension next year?" So I came back with my Retiree Account Statement listing the projected payment for the coming year. The lender came back with "Yeah, but how do we know that they'll keep paying the pension after that?"

I asked the lender if anyone in their organization was a military veteran, let alone a military retiree. Then I said I was going to search for military-friendly lenders. They managed to figure it out.