Mortgage Broker Needs Letter From Vanguard??

[Looking4Ward]

I've been trying to qualify for a mortgage and of course the only documentation they are paying attention to are my tax returns and they only show dividends and capital gain distribution - which doesn't qualify me for very much.

So I furnished statements from both my Vanguard after-tax investment account and my checking account for two years showing the regularly scheduled withdrawals from Vanguard and the corresponding direct deposits to my checking account, withdrawals that in whole do not show up on my tax returns since they are from my after-tax brokerage account.

The mortgage broker tells me the underwriter can't consider this as income, and that "FNMA and FMAC both said this account is an investment account that he earns interest and cap gains out of, basically a savings acct. The money he withdraws isn’t income based, ie annuity, retirement, etc so can’t be considered income BUT amight be able to do something if.... If they have set up a “Consistent set withdrawal” amount and the Investment Co can write a letter stating what the monthly withdrawal is that matches the statements"

Has anyone encountered this before? Is it as simple as asking Vanguard to provide a letter to me stating that yes, he has regularly scheduled withdrawals setup for $XXXX each month?

 

[lauradrops]

We did have to deal with this as well. We wound up doing a 72T to show income for a small mortgage. We tried everything to avoid it as we didn't need that money, but the mortgage broker would not consider the accounts at all. I hope you can do it with just a letter, I would have preferred that.

 

[pb4uski]

https://www.kiplinger.com/article/r...-your-nest-egg-to-qualify-for-a-mortgage.html

The formula to use a nest egg works like this: A lender takes 70% of "eligible" assets. The lender may then subtract closing costs and other loan expenses. However, if you pay closing costs from a taxable or non-retirement account, the closing costs will not be subtracted from the eligible assets. Regardless of the loan term, the balance is then split by 360 months, and the monthly installment is added to your monthly income to help you qualify for a mortgage.

Say you have $1 million of eligible assets—70% of that is $700,000. After subtracting $10,000 in closing costs, you have $690,000. That amount divided by 360 is about $1,917. So $1,917 can be added to your monthly retirement income to help you qualify.

Also see http://www.freddiemac.com/singlefamily/guide/bulletins/pdf/bll1720.pdf
and http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf beginning at page 19

 

[ziggy29]

I suppose different lenders have different standards. When we moved last summer, I started taking SEPP/72t distributions on two of my TIRAs. When we bought a house in September, all my lender (our credit union) required was a couple of the most recent statements showing me taking distributions, as well as showing the total value of the underlying assets.

 

[Eastbayboy]

I just did a mortgage with a pension and withdrawals from my ira. The lender says 6 months of withdrawals from my ira counted as income so I qualified. That is strange they say that this is not income since it is withdrawn systematically for two years. I went to two loan agents and it was the same qualifications.

 

[brucethebroker]

Those of us that are self-employed face similar challenges, since bus. deductions reduce AGI. A family member in the mortgage business says few mortgage brokers understand how business taxes work and reject/restrict such buyers. He suggests finding a new mortgage broker in that instance.

Perhaps that advice is relevant here, also.

 

[joeea]

The mortgage broker tells me the underwriter can't consider this as income, and that "FNMA and FMAC both said this account is an investment account that he earns interest and cap gains out of, basically a savings acct. The money he withdraws isn’t income based, ie annuity, retirement, etc so can’t be considered income BUT amight be able to do something if.... If they have set up a “Consistent set withdrawal” amount and the Investment Co can write a letter stating what the monthly withdrawal is that matches the statements"

Has anyone encountered this before? Is it as simple as asking Vanguard to provide a letter to me stating that yes, he has regularly scheduled withdrawals setup for $XXXX each month?

Yes, basically.

This is something I had discussed with my financial adviser years ago when I was potentially thinking of purchasing a home after retiring.

My adviser would work directly with the broker and underwriter and get them what they need to prove that we could afford the mortgage and then work with me to set up the necessary systematic withdrawal plan.

It turned out that I didn't need it, since we bought a second home before retiring. That ended up being our already-purchased primary home when we both retired recently.

 

[Katsmeow]

Is this money coming out of an IRA or is it coming out of just a regular investment account? If coming out of an IRA, our lender was OK with just printing out the Vanguard statements which showed the regular withdrawal. It may be more complicated though if it is not an IRA. Also, look up asset depletion mortgage.