Getting a mortgage when ERed

[pb4uski]

Since the subject comes up occasional I thought that I would post a link to this interesting article on getting a mortgage when early retired.

Getting a Mortgage When You Have Assets But No Income - Can I Retire Yet?

Most early retirees have no pension, annuity, or Social Security income. Even if you’re a traditional retiree, you might have only one of those income streams. But what if your lifestyle plans require a home purchase? Even if you have the savings to afford a house, you might not necessarily be able to liquidate enough of those assets quickly in a tax efficient manner. So you’ll need a mortgage. But most conventional mortgage loans are based on income. If you can’t show income, how do you go about getting a mortgage?

 

[jazz4cash]

I posted this on the other thread with similar title. This process looks similar to the one in your link.
https://www.google.com/amp/amp.kipl...-your-nest-egg-to-qualify-for-a-mortgage.html

 

[pb4uski]

jazz, is that other thread recent? I tried to find a recent thread on the subject to post the link to to reduce thread proliferation but could not find one.

If it is recent, then mods, please combine the threads and accept my apologies.

 

[jazz4cash]

jazz, is that other thread recent? I tried to find a recent thread on the subject to post the link to to reduce thread proliferation but could not find one.

If it is recent, then mods, please combine the threads and accept my apologies.

I think it's from yesterday.

mortgage applications , rental applications

http://www.early-retirement.org/forums/showthread.php?t=88271

 

[calico1597]

We bought a winter home in AZ in March. Had no problems getting a small mortgage, put about 75% cash down. Have two pensions plus social security. Also had to show copies of all financial records. Could have paid 100% but didn't want to start raiding IRA's at age 65. No problem paying a small mortgage. Our main home is paid for.

 

[pj.mask]

Funny. Had a renter with high income that was always short on cash. Had another renter in between jobs with assets. Would rather someone who can manage money (lives on less than earned) vs risk of paycheck to paycheck

 

[mathjak107]

i was delaying taking social security at the time i put some feelers out .we may buy a co-op next year .

3 banks said it was a toss up as to whether we would be approved even though we have multiple 7 figures in investments .

asset based lending was just to uncompetitive .

but i did start social security last friday so now our income is a different story .

 

[Meadbh]

I bought a rental property two years ago, while ERd. I just had to ask.

 

[mathjak107]

it all depends on the amount of income you have not under your control like an investment portfolio would be . pension ,ss , annuity ,rental are all acceptable income to those who buy these mortgages from the banks .

 

[pb4uski]

I guess that is another potential benefit of doing Roth conversions, I have "pension income" shown on my tax return that I could legitimately use in financing.... my understanding is that some places would count it (since it is consistently on my tax return) and others would not since the amount varies and it is just moving money from one pocket to another.

 

[mathjak107]

3 banks said they cannot count investment income since they can't do asset based lending .

they said i would have a better chance once social security was taken ,which it now is .

 

[pb4uski]

Would they count "pension" income that shows up as such on your tax return? If so, that would sweep in tax-deferred account withdrawals and Roth conversions.

 

[Another Reader]

Find a broker that understands agency guidelines. Banks, especially the large banks, tend not to do things beyond the easy loans.

I own an inherited property with a mortgage that Chase will not allow me to assume because I have more than four mortgages. By their rules, I don't qualify. By agency guidelines, I do qualify, but the bank is allowed a more restrictive overlay.

 

[ExFlyBoy5]

Find a broker that understands agency guidelines. Banks, especially the large banks, tend not to do things beyond the easy loans.

This. When dealing with large operations, most of the underwriting is done automatically, and with no "income", it will get tossed immediately. If you find a a mortgage company that does manual underwriting, it's a little easier; although you will probably look at an extra .25-.50 on the interest rate.

As far as rentals go, my DW w*rks for a fairly large RE firm and she runs the leasing department. They will allow for asset based rentals, but depending on credit score, you may have to pay 3+ months in advance. Of course, renting is a whole 'nother pile of beans compared to securing a mortgage.