I FIRE'ed in laye 2006. Got a new "one closing" construction loan/1st mortgage from Wachovia 2 weeks before I retired, based on my salary---and they knew I was retiring because I had told them so.
About a year later I refi'd. Not yet collecting SS, but have a small pension which just barely covers the mortgage but that's all. The rest of my income is dividends and whatever I choose to withdraw from my investment accounts. They wouldn't accept "whatever I want it to be" as my income (quelle surpris!)
. Naturally I didn't want to go stated income, since the rates were much higher. And nowadays stated income is impossible.
So I decided what I wanted my total income to be, and told them I took a $5000 monthly draw from one of my brokerage accounts. They would accept that---as long as I could show/prove sufficient assets in the account to fund the draw for at least 3 years. No problem. But then they said, Oops, that's a joint account and since your wife isn't on the note it needs to be from an individual account. Fine, so use the individual account. All went ok then and got approval.
But at the last minute the underwriter objected and said, Hey you can decide to stop or reduce your monthly draw at any time. Like, DUH!!! Instead, they wanted the draw to come from a retirement account (IRA/401k). Oddly enough, they wanted to see "retirement income" to come from a retirement account rather than an ordinary account. Guess the underwriter didn't realize that money is fungible. But---anything to please you, sir!
Okay, fine, I called my IRA broker and had them set up a fixed monthly draw on the IRA, and send me a letter acknowledging this so I could fax it to the lender. Also told him that I would probably cancel it as soon as the mortgage closed. This made the underwriter happy, and got their blessing.
Then the next day the boss underwriter wanted to see proof that I was actually taking the draw.
?? So I had to download & send them my past checking account statement which showed an ACH transfer of the $5000 draw. Which was coming from my joint brikerage account all along. That cleared everything and we closed.
They didn't want to see my W-2 or 1040, because those reflected my pre-retirement situation and was meaningless after retirement. Good for them.
BTW, all this took only 2 1/2 weeks---app to closing. Very fast!
The check from the IRA came the next week, and I called the broker and told them I wanted to roll it back into the IRA. They said, No problem we'll just cancel the transaction and it'll be like it never happened. Oh, and I told them to cancel the monthly draw form the IRA.
Five months ago (December 2007--when the subprime mortgage mess was in a full boil) I refi'd again--different lender, though. I told them the situation, told them that I had done this exact same thing less than a year ago, and send them the documentation & "confirmation of your instructions of monthly withdrawal" letter from the IRA. Sailed through smooth as silk. I just got 1 call from the loan processor, left a message on my answering machine, "I don't see that you have enough income." Followed a little bit later by another one, "Never mind, I see the letter from your IRA."
This one, I made the app on Dec 3 and we closed on Dec 28. And I was on a cruise and out of the country and out of communications from Dec 10 to Dec 20.