Getting a new mortgage when retired.

My experience has been the banks want to see a cash flow, ie 1040. They don't seem to care how much you have in the bank or how much you can get your hands on in a few days/weeks.
They want to see something that behaves like a paycheck. Regular withdrawal cash flow that comes every month. Everybody knows how paychecks work, but nobody can get their head around the answer of "What is your monthly income?" as "Whatever I feel like withdrawing."
 
We demolished our lakefront seasonal "camp" in Oct 2011 and rebuilt a year-round home and moved in May 2012.

It wasn't until after all was said and done that it dawned on me that perhaps I should have let our mortgage lender know that we had demolished part of their collateral. :facepalm:

They had no way of knowing.

We bought a new house in March and are currently selling our Florida condo (which has no mortgage). For the new house, rather than sell my brokrage account investments, I took out a Pledged Asses Line of Credit to pay for the new house and then will pay that off when the Florida condo sells. The interest rate is 8.72%, but I am earning over 5% on the collateral so my net cost is only about 3.75% so if you have a good sized brokerage account then you might consider that as temporary substitute collateral for the lender.

If it was me, I would not tell then lender and plead ignorance if you get caught. If the mortgage balance is less than the land value, I wouldn't sweat it.
I have thought about doing something like this. But if you're paying taxes on the 5% earnings and not able to deduct the 8.72%, I think the net cost is worse than the simple subtraction of rates.
 
If you knock the house down how can you get a mortgage? Wouldn’t that require a construction loan?
 
Not at all unusual in my area. When they built my gated community 5 years ago there were protests that the land could've been put to better use by building 500 "tiny houses" instead of the 75 that we have.

"Density" is now often viewed as a positive thing depending upon where you live.
Happening everywhere. NH starting to push this and there’s even a bill in the state house to try to take away local municipality control. Big debate and push back going on.
 
Like others, I got my mortgage in retirement by establishing a scheduled monthly withdrawal from my IRA, providing proof of that monthly withdrawal in the form of a letter that I downloaded from Fidelity (didn't even have to talk to anyone at Fidelity). I canceled the scheduled withdrawals the day after closing. While setting up the loan, the loan officer told me the amount that monthly withdrawal needed to be in order to qualify for the loan. He was totally in on the game and told me exactly what I needed to do.
 
Not at all unusual in my area. When they built my gated community 5 years ago there were protests that the land could've been put to better use by building 500 "tiny houses" instead of the 75 that we have.

"Density" is now often viewed as a positive thing depending upon where you live.
Ahhh. You lost me at "Gated Community". Not for me.
 
Well I talked to the bank. They said for my situation a "Construction Loan" could be submitted against house plans. The amount of the loan must also pay off the existing mortgage. But as others have said, they want to see some kind of regular withdrawals from the portfolio, and a balance behind them to support years of such withdrawals (not a problem). As other have said, once the loan is processed and paid, I can apparently just cancel the withdrawals, which I would. I do what another poster called "lumpy" withdrawals several times a year. I like it that way.

In this process we are embarking with investing in the development some house plans, knowing it is a sunk cost whether we actually do this or not. Detailed plans are required for the town to approve the project (including new septic design). We are going to work on this until the fall when we think it will be a "fish or cut bait" moment. A bit relieved/surprised that a modest mortgage might be possible for us.
 
Very good news for you. It sounds far less complicated than some other scenarios.
 
Ahhh. You lost me at "Gated Community". Not for me.
The whole point behind a gated community is that it's not for everyone.
 
Last edited:
Back
Top Bottom