Real Estate Issues in Retirement

[43210]

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

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.

 

[FreeBear]

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.

 

[45th Birthday]

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.

 

[jazz4cash]

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.

 

[43210]

^ Thanks for clarification.

 

[jazz4cash]

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/programs/asset-depletion-mortgage-overview.html

 

[DEC-1982]

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.