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Old 12-18-2017, 08:41 PM   #41
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Originally Posted by karen1972 View Post
Well lets just say its WAY easier to get a mortgage while your working.. I retired in 2015, went to get a mortgage in 2016. I went through my credit union and basically they were willing to take my pension (only because I had it put into my bank account with them for more than 1 year). They said they may have been willing to take dividend income but again I would have had to have it distributed for more than a year, which I didn't because I just rolled it over.

So my honey who had lost his job and hadn't worked in 6 months but had landed a gig, handed in a pay check stub that he had been working at for only 2 months and they took that over going through the hassle of trying to underwrite based on dividends. Just saying.. basically they took his tax returns for the last 2 years, took the current pay stub said, yeh that would be about the same or more income so we will approve based on that dollar amount. I think eventually they would have wrote my loan, but why go through the hassle.
I think most lenders are lazy.

They just want to look at W2 and say yep 35% covers it. When you have a complicated situation, Self employed, dividends that you don't spend, rents, gifts, etc they don't want to truly analyze the tax return to get to your free cash flow.

I'm currently going through the process right now. My new loan combining two loans will be lower payments then the sum of the two, but they are making me jump through the hoops. Just responded earlier this evening explaining that I actually have 2X the income required if they add back in depreciation, carry forward losses, and soft discretionary expenses.
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Old 12-19-2017, 07:29 AM   #42
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Getting a loan while working is DEFINITELY easier.

The issue with getting it after retirement and using an asset based loan is that you need to put 30% down, if I understand this correctly. That 30% down payment can be a good chunk of cash, and most of us keep a limited amount of cash.

Right now, of course, selling equities for cash might turn out to be a great move, but who knows for sure?
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Old 12-19-2017, 07:59 AM   #43
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The issue with getting it after retirement and using an asset based loan is that you need to put 30% down, if I understand this correctly. That 30% down payment can be a good chunk of cash, and most of us keep a limited amount of cash.
You do not understand this correctly. There is no requirement for a 30% downpayment.
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Old 12-19-2017, 09:19 AM   #44
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You do not understand this correctly. There is no requirement for a 30% downpayment.
The article mentioned earlier is very dated (Oct 2013), so perhaps what it says is wrong, or more likely, the requirements have changed since then.

https://www.kiplinger.com/article/re...-mortgage.html

"

Under these rules, generally known as "asset depletion" or "asset dissipation" rules, you will need a substantial down payment, says Ron Wivagg, national sales manager for Prosperity Mortgage, in Chantilly, Va. You'll need at least a 30% down payment if you're buying a new home or at least 30% equity if you are refinancing. "This helps us manage the risks involved in making this option available," says German.

"
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Old 12-19-2017, 09:42 AM   #45
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Originally Posted by DEC-1982 View Post
The article mentioned earlier is very dated (Oct 2013), so perhaps what it says is wrong, or more likely, the requirements have changed since then.

https://www.kiplinger.com/article/re...-mortgage.html

"

Under these rules, generally known as "asset depletion" or "asset dissipation" rules, you will need a substantial down payment, says Ron Wivagg, national sales manager for Prosperity Mortgage, in Chantilly, Va. You'll need at least a 30% down payment if you're buying a new home or at least 30% equity if you are refinancing. "This helps us manage the risks involved in making this option available," says German.

"
Sorry, I thought you were conflating the 30% haircut on the investment portfolio with the required down payment. But, I can tell you from personal experience with two of these loans (one in 2014 and one in 2015) that this was not the case.
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Old 12-19-2017, 09:48 AM   #46
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Originally Posted by DEC-1982 View Post
The article mentioned earlier is very dated (Oct 2013), so perhaps what it says is wrong, or more likely, the requirements have changed since then.

https://www.kiplinger.com/article/re...-mortgage.html

"

Under these rules, generally known as "asset depletion" or "asset dissipation" rules, you will need a substantial down payment, says Ron Wivagg, national sales manager for Prosperity Mortgage, in Chantilly, Va. You'll need at least a 30% down payment if you're buying a new home or at least 30% equity if you are refinancing. "This helps us manage the risks involved in making this option available," says German.

"
My take on the quote you pasted from the linked article is that the 30% equity down payment is stipulated by that particular lender, but not necessarily a blanket requirement.

I've been searching for more recent info on this type of funding and there is not much out there. Here is one lender that has a program similar to what is being discussed and I think it also requires 75% LTV. A 25-30% equity requirement seems reasonable to me, especially compared to the alternative of paying cash.
https://www.nshomefunding.com/produc...etion-program/
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Old 12-19-2017, 10:08 AM   #47
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Sorry, I thought you were conflating the 30% haircut on the investment portfolio with the required down payment. But, I can tell you from personal experience with two of these loans (one in 2014 and one in 2015) that this was not the case.
Thank you, "45th Birthday". It's good to know 30% down payment is not a real requirement, at least not for all lenders. As always, experience beats theory or in my case, reading.
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Old 12-19-2017, 11:23 AM   #48
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I'm still w*rking, but ran into a similar problem over the summer, when I tried to get prequalified for a mortgage. At the time, I owed about $100K on my current house, and the monthly payment was around $1847. It had been an HELOC that reached the end of its draw period, and converted to a 10-year mortgage, so the monthly payment was comparatively high.

Anyway, ideally I want to be able to buy a new house, without it being dependent on selling the current house. That way I could move at my own pace, and could hold out for a better price on the current house, rather than possibly get talked into a fire-sale price, just to get out of it, for fear of losing out on what might be my dream home.

The mortgage company, however, had an issue with me carrying that current mortgage. Even though I only owed $100K, they were focusing on the monthly payment. I asked them, what if I payed it down? Their response is that would change nothing, because while that would reduce the principal and get it paid off sooner, it wouldn't change the monthly payment.

Nevermind the fact that I had the assets to pay off the mortgage, plus pay cash for just about any house I was in the market for. They didn't care about that, only that monthly payment.

I guess it'll soon be a moot point though, because with the way the market took off, I decided to pay down the mortgage anyway, and should have it wiped out completely within the next two months. Still, it makes me a bit worried about my chances of getting a mortgage once I'm retired. So, my current plan is to hold out and keep the j*b at least until I've landed a new house, with a mortgage.
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Old 12-19-2017, 12:54 PM   #49
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I'm still w*rking, but ran into a similar problem over the summer, when I tried to get prequalified for a mortgage. At the time, I owed about $100K on my current house, and the monthly payment was around $1847. It had been an HELOC that reached the end of its draw period, and converted to a 10-year mortgage, so the monthly payment was comparatively high.

Anyway, ideally I want to be able to buy a new house, without it being dependent on selling the current house. That way I could move at my own pace, and could hold out for a better price on the current house, rather than possibly get talked into a fire-sale price, just to get out of it, for fear of losing out on what might be my dream home.

The mortgage company, however, had an issue with me carrying that current mortgage. Even though I only owed $100K, they were focusing on the monthly payment. I asked them, what if I payed it down? Their response is that would change nothing, because while that would reduce the principal and get it paid off sooner, it wouldn't change the monthly payment.

Nevermind the fact that I had the assets to pay off the mortgage, plus pay cash for just about any house I was in the market for. They didn't care about that, only that monthly payment.

I guess it'll soon be a moot point though, because with the way the market took off, I decided to pay down the mortgage anyway, and should have it wiped out completely within the next two months. Still, it makes me a bit worried about my chances of getting a mortgage once I'm retired. So, my current plan is to hold out and keep the j*b at least until I've landed a new house, with a mortgage.
I kinda remember when you were going through this awhile back. Bummer. Note that at least some of the asset depletion loans being discussed here are for > 59.5. I think the idea is that you can easily draw down the nest egg for income w/o penalty. I also noticed the term "liquid" assets being used so I wonder if the definition of liquid might vary from one lender to another.
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Old 12-19-2017, 03:11 PM   #50
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I kinda remember when you were going through this awhile back. Bummer. Note that at least some of the asset depletion loans being discussed here are for > 59.5. I think the idea is that you can easily draw down the nest egg for income w/o penalty. I also noticed the term "liquid" assets being used so I wonder if the definition of liquid might vary from one lender to another.
Unfortunately, I have a few years still before I hit 59.5. Roughly 11.75 of them. It almost seems like they stack the deck against you, to KEEP you w*rking!
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Old 12-19-2017, 03:29 PM   #51
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Note that at least some of the asset depletion loans being discussed here are for > 59.5.
Where did you see that age requirement? The article said
Quote:
Originally Posted by https://www.kiplinger.com/article/retirement/T040-C000-S004-use-your-nest-egg-to-qualify-for-a-mortgage.html
Assets that can be counted under these rules include retirement accounts such as IRAs and 401(k)s, lump-sum retirement account distributions and annuities. "The borrower must be fully vested, and the retirement assets must be in a retirement account that is immediately accessible," says Brad German, a spokesman for Freddie Mac. That means the money cannot be subject to an early-withdrawal penalty and cannot currently be used for income.
That seems to imply that 401/403 assets using Age 55 rule, or 457 assets at any age, could also be used. I'd like to know if anyone is sure about this part of the rule.
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Old 12-19-2017, 03:45 PM   #52
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Unfortunately, I have a few years still before I hit 59.5. Roughly 11.75 of them. It almost seems like they stack the deck against you, to KEEP you w*rking!
I was in the same boat when I FIRE'd, but fortunately I bought a new place before retirement and took on a 30 year mortgage. It's nice to now have a much larger taxable account in order to manage ACA subsidies and taxes in general.

Paying off the mortgage is not too tempting with my fairly decent interest rate. Also, this is a HCOL area, in large part because of the real estate taxes. The RE taxes (on monthly basis) and HOA fee are almost the size of my mortgage payment! I guess the mortgage payment is relatively small compared to my other fixed and discretionary expenses, and the improved liquidity in terms after tax savings brings huge peace of mind.

It's funny that this thread is about the "problems" of getting a mortgage after FIRE, when most of the discussions debate the pros and cons of keeping vs paying off the mortgage. I guess there are worse problem to have...

Oh, we paid for the last car in cash. I guess I should have tried for the cheap factory financing since I was still w*rking. It just wasn't worth the bother.
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Old 12-19-2017, 04:04 PM   #53
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I kinda remember when you were going through this awhile back. Bummer. Note that at least some of the asset depletion loans being discussed here are for > 59.5. I think the idea is that you can easily draw down the nest egg for income w/o penalty. I also noticed the term "liquid" assets being used so I wonder if the definition of liquid might vary from one lender to another.
Both of my asset depletion mortgages were when age < 59.5. In my case, they gave me 100% credit for cash, and took a 30% haircut for taxable, then a 40% haircut for tax deferred. Then used a rate I do not remember to get to an income level.
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Old 12-19-2017, 04:09 PM   #54
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Where did you see that age requirement? The article said



That seems to imply that 401/403 assets using Age 55 rule, or 457 assets at any age, could also be used. I'd like to know if anyone is sure about this part of the rule.


Note I did say "at least some". I saw the age requirement in the link I posted which is a lender offering these loans. I agree with your observation that 401k assets eligible under the age 55 exception should be eligible. This just reinforces my perception that you have to find a lender that is experienced with this product. I'm curious to learn more about these.
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Old 12-19-2017, 04:19 PM   #55
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^ Thanks for clarification.
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Old 12-19-2017, 09:03 PM   #56
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I wonder what happened to OP?
Here is the most comprehensive description of this product I have found and it appears to be current. The Fannie Mae guidelines do not restrict retirement assets for borrowers<59.5 but the tax penalty must be subtracted from the asset balance.
https://www.freeandclear.com/program...-overview.html
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Old 12-20-2017, 06:51 AM   #57
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This just reinforces my perception that you have to find a lender that is experienced with this product.
All sorts of things to consider.

Let's say a lender offers to pay $5K or $10K towards closing costs. The loan might have a slightly higher interest rate, but if one is going to pay off the loan within a few months by selling an existing house then the higher loan rate matters less. Then maybe working with somebody who has to go through a learning curve becomes acceptable, though not ideal.
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