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Old 06-20-2021, 09:20 AM   #41
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This may be the reason they are so hard to find. We’re just not worth the time to process exceptions. Too bad. Asset loans to those like on this board would likely be the safest they would ever make.
A key factor why lending institutions don't want to "process exceptions" is that the lending institution is often subject to scrutiny based on anti-discrimination laws. For example, exceptions that might tilt the numbers to make it look like geographic red-lining, racial discrimination or gender discrimination is taking place in their overall statistics. They need to have a set of rules that leads them to compliance and make zero exceptions.
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Old 06-20-2021, 09:54 AM   #42
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I'm late to this thread but I thought I'd add to the "no problem if making regular withdrawals". We bought a new house in 2019, financed 80% (many hundred k) with no regular income with a local broker. Our monthly deposits from our taxable brokerage account to our checking account met the income criterion. They looked at our IRA balances etc. but were only interested in the monthly draws. They told us at the time we needed to have at least 3 month pattern of withdrawal. We have since refinanced (30 yr, 2.85%) trough the Costco program and again no problem as long as we had those fixed monthly transfers from brokerage to checking (but we now also have DW's (small) SS check too).
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Old 06-20-2021, 10:01 AM   #43
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Interesting that they would accept transfers from taxable brokerage accounts since these don't show up as income on your tax return.

Given the disparity in reports we have received just in this thread, it seems that they are totally clueless.
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Old 06-20-2021, 11:47 AM   #44
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Interesting that they would accept transfers from taxable brokerage accounts since these don't show up as income on your tax return.

Given the disparity in reports we have received just in this thread, it seems that they are totally clueless.
I agree. It's strange. I explored an asset based mortgage through Schwab and would have gone that route but it was unnecessary. We were early in retirement and still adjusting the amount transferred each month from brokerage to checking (I like having a "paycheck" ), but that didn't bother our original lender (CMG mortgage company). By the time we refinanced we had a steady draw in place and the process was very easy.
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Old 06-20-2021, 11:57 AM   #45
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Interesting that they would accept transfers from taxable brokerage accounts since these don't show up as income on your tax return.

Given the disparity in reports we have received just in this thread, it seems that they are totally clueless.
A long time ago a banker had mentioned that as a way to "manufacture" income so that is why I mentioned it earlier. It probably depends on if a broker wants the loan or not.

I'm looking for options other than IRA distributions or Roth conversions because we will have a boatload of taxable gain from the sale (a good thing) which, since it is not recurring, will not help with loan qualification but would result in a hefty tax rate on any IRA money.
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Old 06-20-2021, 12:19 PM   #46
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A key factor why lending institutions don't want to "process exceptions" is that the lending institution is often subject to scrutiny based on anti-discrimination laws. For example, exceptions that might tilt the numbers to make it look like geographic red-lining, racial discrimination or gender discrimination is taking place in their overall statistics. They need to have a set of rules that leads them to compliance and make zero exceptions.
Quite likely. An additional reason might be the packaging and sale of the mortgages to investors requires all the mortgages to meet certain standards and conditions, and income (or absence) is one.
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Old 06-20-2021, 01:05 PM   #47
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Quite likely. An additional reason might be the packaging and sale of the mortgages to investors requires all the mortgages to meet certain standards and conditions, and income (or absence) is one.
Yes, they would probably have to keep a loan of this type in-house and not sell it off. We had a farm loan once that wasn't sellable and our local bank kept it. It was actually great not to have the lender change multiple times (as our other loans did) during the mortgage period.
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Old 06-20-2021, 01:18 PM   #48
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A long time ago a banker had mentioned that as a way to "manufacture" income so that is why I mentioned it earlier. It probably depends on if a broker wants the loan or not.

I'm looking for options other than IRA distributions or Roth conversions because we will have a boatload of taxable gain from the sale (a good thing) which, since it is not recurring, will not help with loan qualification but would result in a hefty tax rate on any IRA money.

The Costco lenders all told me we only needed to show the distributions for one month. Most of their debt to income ratios were pretty generous, like 50%. For example, if your mortgage loan, taxes and insurance would be $25K a year, and you have no other debt, you only need to show a $50K annual income to qualify. I didn't ask them about non-retirement distribution transfers, since it was easier for us to do the IRAs, but either way, assuming you had no other qualifying income, and you had to use retirement accounts, you would only have to withdraw a little over $4K for the $25K a year housing cost, or double that if your housing cost was twice as big. Wouldn't your tax cost just be you highest tax bracket times the ~$4K, or $8K or whatever your loan amount is? You are going to have to pay tax on that amount anyway, at some point. How much is your incremental tax different in the year you sell your home than other years? An extra .20 tax on $4K is only $800.
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Old 06-20-2021, 03:36 PM   #49
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Asset based mortgage

Ill spare everyone the details of our tax situation but Ill just say that we also have some other non-recurring income that came in this year that puts us in a high bracket for any additional ordinary income.
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Old 06-20-2021, 04:31 PM   #50
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I’ll spare everyone the details of our tax situation but I’ll just say that we also have some other non-recurring income that came in this year that puts us in a high bracket for any additional ordinary income.
The highest federal tax bracket is 37% so if you normally pay 12% that is an extra 25% in federal taxes but it would only need to be on one month's IRA transfers on the bare minimum annualized amount you need to meet the lender's qualifying ratios.
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Old 06-20-2021, 04:45 PM   #51
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2 years ago we got an asset based HELOC from a regional bank for 70% of the appraised value of our home. We were 57 years old and living off our taxable investments. We had to provide copies of all investment statements. I'm sure there was some formula they used but I don't know what it was.
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Old 06-20-2021, 05:05 PM   #52
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The highest federal tax bracket is 37% so if you normally pay 12% that is an extra 25% in federal taxes but it would only need to be on one month's IRA transfers on the bare minimum annualized amount you need to meet the lender's qualifying ratios.


Assuming you found a lender that would allow only a one month look at income to qualify I agree that the cost would be minimal. I believe finding such a lender would be more than a bit challenging. If you know of such lenders Im all ears and would love some references. That situation would be ideal for us.
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Old 06-20-2021, 05:06 PM   #53
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2 years ago we got an asset based HELOC from a regional bank for 70% of the appraised value of our home. We were 57 years old and living off our taxable investments. We had to provide copies of all investment statements. I'm sure there was some formula they used but I don't know what it was.


Do you mind sharing the name of the bank?
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Old 06-20-2021, 05:39 PM   #54
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I'm late to this thread but I thought I'd add to the "no problem if making regular withdrawals". We bought a new house in 2019, financed 80% (many hundred k) with no regular income with a local broker. Our monthly deposits from our taxable brokerage account to our checking account met the income criterion. They looked at our IRA balances etc. but were only interested in the monthly draws. They told us at the time we needed to have at least 3 month pattern of withdrawal. We have since refinanced (30 yr, 2.85%) trough the Costco program and again no problem as long as we had those fixed monthly transfers from brokerage to checking (but we now also have DW's (small) SS check too).
So, depositing $20k/month from a brokerage account into a checking account for 3 months minimum qualifies me (using affordability calculators) for a nearly $1 million mortgage?

Sign me up!
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Old 06-20-2021, 05:48 PM   #55
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Assuming you found a lender that would allow only a one month look at income to qualify I agree that the cost would be minimal. I believe finding such a lender would be more than a bit challenging. If you know of such lenders I’m all ears and would love some references. That situation would be ideal for us.
Check out the Costco Mortgage program lenders, especially NASB and NBKC Bank. We refinanced with NBKC with a one month IRA transfer history. If you want to PM me I can give you our contact names at each bank and more details. I probably contacted at least 6 of the lenders in the Costco program and they were all pretty consistent with a 1 month IRA transfer history. They may count taxable as well per fostersciks' experience, but I didn't ask about that, so in my experience I can only speak to the IRA transfers.

Link: Mortgage Services | Costco
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Old 06-20-2021, 05:54 PM   #56
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So, depositing $20k/month from a brokerage account into a checking account for 3 months minimum qualifies me (using affordability calculators) for a nearly $1 million mortgage?

Sign me up!

If you can also show $20K X 36 months worth of assets, apparently so, at least with some lenders.
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Old 06-20-2021, 07:38 PM   #57
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Yes, they would probably have to keep a loan of this type in-house and not sell it off..

If they comply with the Fannie or Freddie guidelines it shouldnt be an issue to sell it off.
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Old 06-20-2021, 07:41 PM   #58
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I agree. It's strange. I explored an asset based mortgage through Schwab and would have gone that route but it was unnecessary.


Thats interesting. Im a bit surprised the big firms like Schwab, Fido, and VG dont partner with a mortgage lender and promote these loans. Maybe Im just not aware.
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Old 06-20-2021, 10:20 PM   #59
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Asset based mortgage

^^^^
Schwab does, through Quicken Loans. I have no knowledge of Fido or VG
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Old 06-22-2021, 03:44 PM   #60
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If you have social security, annuity or pension income and excellent credit, it should not be a problem finding a mortgage underwriter. Just be able to document several previous years of sufficient income from some source commensurate with the size mortgage you'd like (payment not greater than 40% income and reasonable other debt).
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