Decision in One Month

[Accidental Retiree]

Notified employer yesterday of my resignation.

Hit a small bump today when I went to get a pre-approval for a mortgage. Had to put 50% down as they would not consider assets and only income in which I'll be at the military retirement of $38,500. Qualified me for $162,500 at 3.25%. Not what I wanted as we were planning to put down just 20% to avoid PMI. According to ESPlanner, the additional 30% down will cost us approximately $5K annually in our discretionary spending budget. Oh well, I'm sure there will be many more bumps along the way.

Re: For your next mortgage, you may want to shop around a bit. We have found that lenders don't accpet our paying ourselves out of our regular savings account--that is just asset depletion.

However, once DH put in the paperwork to make distributions from the tIRA and got the first payment into the checking account, things changed,
as long as the account shows that those distributions can continue for 3 years.

I can't recall whether your pension-matching VG funds have already been taxed or whether they are from your as-yet-untaxed retirement funds, but consider your sources. The lenders want you to be drawing funds out of retirement accounts in a regular income stream and paying the taxes on those funds.

 

[NanoSour]

R
I can't recall whether your pension-matching VG funds have already been taxed or whether they are from your as-yet-untaxed retirement funds, but consider your sources. The lenders want you to be drawing funds out of retirement accounts in a regular income stream and paying the taxes on those funds.

The VG funds are after tax. Why would it be important to by paying taxes on the funds that you are withdrawing from? Seems odd.

 

[Accidental Retiree]

The VG funds are after tax. Why would it be important to by paying taxes on the funds that you are withdrawing from? Seems odd.

I have no idea why they make the distinction, but they do. We learned that 72(t)s work the same way.

 

[Katsmeow]

Hit a small bump today when I went to get a pre-approval for a mortgage. Had to put 50% down as they would not consider assets and only income in which I'll be at the military retirement of $38,500. Qualified me for $162,500 at 3.25%. Not what I wanted as we were planning to put down just 20% to avoid PMI. According to ESPlanner, the additional 30% down will cost us approximately $5K annually in our discretionary spending budget. Oh well, I'm sure there will be many more bumps along the way.

Not sure how helpful this would be at your age. However, you might want to look up and ask about asset depletion mortgages.

 

[harley]

Hit a small bump today when I went to get a pre-approval for a mortgage. Had to put 50% down as they would not consider assets and only income in which I'll be at the military retirement of $38,500. Qualified me for $162,500 at 3.25%. Not what I wanted as we were planning to put down just 20% to avoid PMI. According to ESPlanner, the additional 30% down will cost us approximately $5K annually in our discretionary spending budget. Oh well, I'm sure there will be many more bumps along the way.

I was going to mention getting the mortgage while you're still employed. I've had a heck of a time refinancing as a retiree living off assets, especially since I'm working the income so as to keep myself in a low tax bracket for cap gains breaks and Roth converisons. Even though I can easily afford to pay off the mortgage at any time, and even though refinancing will just make it that much easier to make the lower payments, if I don't have a big enough income they won't lend to me.

However, you're currently still employed, aren't you? All they are going to ask for is past tax statements, maybe a recent paystub. Your bump in the road might be a case of too much information. I don't see any reason to mention you are retiring soon, or just did, or whatever. You're not scamming them into giving you anything you can't afford, so just giving them what they ask for and not mentioning the immediate future is just a way to grease the skids. I'd try again with another company and see how it works.

 

[harley]

Not sure how helpful this would be at your age. However, you might want to look up and ask about asset depletion mortgages.

Asset depletion mortgages tend to have significantly higher rates (1% or more) than standard mortgages. I tried that when I was having problems getting a refi. Same with smaller local banks. Basically, if the mortgage can't be sold to Fannie/Freddie, the rate is higher. At least in my experience in MD and VA.

 

[Katsmeow]

Asset depletion mortgages tend to have significantly higher rates (1% or more) than standard mortgages. I tried that when I was having problems getting a refi. Same with smaller local banks. Basically, if the mortgage can't be sold to Fannie/Freddie, the rate is higher. At least in my experience in MD and VA.

I am not talking about a mortgage that can't be sold to Fannie/Freddie. The asset depletion loans I was looking at could be sold. We didn't end up doing it, but I'm sure the OP can do a search for asset depletion mortgage and find out a lot (or talk to a mortgage broker).

 

[NanoSour]

Not sure how helpful this would be at your age. However, you might want to look up and ask about asset depletion mortgages.

Thanks for the suggestion. I'd never heard of them, but now am familiar. I spoke to a broker today and looks like we should be able to get to the 20% down.

I will say I don't like all these mortgage companies wanting to pull my credit. Afraid it will have a negative impact on the score. I get conflicting information about that.

 

[Katsmeow]

I will say I don't like all these mortgage companies wanting to pull my credit. Afraid it will have a negative impact on the score. I get conflicting information about that.

Those within a certain period of time are treated as one inquiry.

Credit Report Inquiries: How Credit Checks Affect Your Credit Score

 

[Accidental Retiree]

I was going to mention getting the mortgage while you're still employed.

However, you're currently still employed, aren't you? All they are going to ask for is past tax statements, maybe a recent paystub. Your bump in the road might be a case of too much information. I don't see any reason to mention you are retiring soon, or just did, or whatever. You're not scamming them into giving you anything you can't afford, so just giving them what they ask for and not mentioning the immediate future is just a way to grease the skids. I'd try again with another company and see how it works.

They also ask what is the purpose of the loan. Primary residence or second home? Since NanoSour is buying a primary residence in a new area, IIRC, then his current job income would not help him, unless the new area is within reasonable commuting distance or otherwise explained.

 

[NanoSour]

Well just got call from the Mortgage broker who yesterday said we could do 20%. Today she says, yes, but at 4.75% rate.

Not happy today. But could be worst.

 

[NanoSour]

I took your numbers and put them in Firecalc I used annual spending of 72400 for 4 years, then 102400 for 3 years, 132400 for one year (2 kids in college), then 3 more years at 102400 and then in year 12 went back to 72400

Kat, how were you able to break up this spending into groups using FIRECalc?

I can't see how this is done.

 

[rodi]

Kat, how were you able to break up this spending into groups using FIRECalc?

I can't see how this is done.

Not Katsmeow - but I'll answer.

You can modify the income streams with the pension/off chart spending categories on the 2nd tab, towards the bottom.

For example - I include our spending for the near term, that includes $12k/year going into the 529's. (kids are 6th grade and 4th gradel age now) That's the number I put on the first page for spending. I show a non-cola'd pension coming online at the time my youngest turns 22 of $12k/year. Basically, I'm using a virtual pension to replace spending that is going away.

There may be other ways to do it - but that's how I handled it when I was modeling it.

 

[Live And Learn]

Kat, how were you able to break up this spending into groups using FIRECalc?

I can't see how this is done.

You also make a donation and be given the ability to enter annual spending amounts if you need more options then the basic calculator gives you.

 

[NanoSour]

You also make a donation and be given the ability to enter annual spending amounts if you need more options then the basic calculator gives you.

I thought I knew FIRECalc pretty well, but I don't see where to make a donation or annual spending amounts.