How do you get a mortgage when you're ER'd?

[nanannjen]

We are looking to ER early next year, and relocate to a lower cost area/state (take the money we made in CA and run!). My question is, how do you get a mortgage without a job? Will they look at assets only? Do we need to buy a new house before we quit? We were thinking about renting for a while so we could be sure what part of town, etc. - but maybe that's not an option? Thanks!

 

[Rambler]

Do you have 1099s showing your fixed/divvie income? Can you show them your portfolio statement? Have you talked to a loan broker or bank? ...I think they could tell you better than me. Do you really need a mortgage? Better to have a mortgage or to pay cash (I know, the eternal question, with more than one right answer)?

I don't have a mortgage and plan to never ever have one again, so the above are just some ideas.

R

 

[Sparky]

We are looking to ER early next year, and relocate to a lower cost area/state (take the money we made in CA and run!). My question is, how do you get a mortgage without a job? Will they look at assets only? Do we need to buy a new house before we quit? We were thinking about renting for a while so we could be sure what part of town, etc. - but maybe that's not an option? Thanks!

In 2006, anyway, all the lenders were looking at was your income. We owned our first house outright and wanted to buy the next one and take out some sort of mortgage or bridge loan on the first house, buy the second and then repay it quickly (we wanted to buy #2 first, then sell #1, that is, live in #1 while we renovated #2, a scary proposition which I would not recommend). The lenders could not get their (collective) minds around it. They had no interest in assets. We ended up taking out a margin loan and then repaying that. The important thing I got out of one lender was a pre-approval letter, which definitely helped when shopping.

 

[bbbamI]

This thread may be helpful...

http://www.early-retirement.org/for...an-when-retired-37374.html?highlight=mortgage

 

[nanannjen]

That's a great thread - thank you! I had done a search, but I guess that I didn't go far enough back.

It still sounds iffy - some people's experience is that you can do it, some said the lenders wanted proof of income. We will be putting down at least 50% - maybe a margin account for the rest is a fallback position. I guess that when the time comes closer, we'll have to talk to mortgage brokers in our new locale.

Thanks!

 

[cardude]

I would get the mortgage before you quit. I had a similiar experience when I ERd a few months ago. Tried to refi our house with Wells Fargo but they would not do it since I had no W2 income. Great credit scores, plenty of money in the bank, but since DW or I had no job it really freaked them out.

 

[tryan]

Put heloc on the 1st house while working. Now you have all the flexability you need to buy the second.

I was regected for a re-fi after retirement ... " insufficient income". Credit was ~750 (not an issue).

 

[Texas Proud]

My mom bought a one bedroom condo recently..... they wanted to see she had enough 'income' that was not subject to the market whims... SS and retirement income... dividends and such did not count... having 'enough' assets did not count (she does not have a great deal, but plenty for her)...

She got fed up with them.... and all the fees so she cashed in some CDs and bought the place with cash... saved her hassle and thousands in fees... her view was that she is getting a much better return on her money because she does not have to pay them and when you add on the fees the rate is higher than the stated rate...