Getting a mortgage for early retirees

[moneytaichi]

My DH and I FIREed 2 years ago and have been renting ever since. We may want to buy a house if the recession drops the house prices significantly. I have a bunch of cash sitting on the side now from selling the previous house 2 years ago. Try to decide if we should invest most of them on stocks or keep huge cash pile so we can buy the house with cash when the market is right. We have not decided where we want to settle down. My concern on investing most of them in stocks is that we can't get a mortgage without incomes. But setting aside a huge cash pile for a just-in-case house-buying scenario seems to be a waste too.

My question is if early-retirees can qualify for mortgages with proof from various investment assets, especially from after-tax and Roth. I can image that lenders don't want to count on 401k and IRA since they are bankruptcy protected. If we can get a mortgage, we only need to keep the down payment as cash and invest the rest. Also, if we own a house, can we get a home equity loan?

Thanks so much for your thoughts!

[Dicey]

I believe you can set up automatic transfers that qualify as "income", but who knows how the current situation is going to play out? On one hand, RE prices will probably head downward over the next year or two, depending how long this thing lasts. OTOH, this could be a once-in-a-lifetime opportunity to buy stocks at bargain prices. Maybe do some of both?

[moneytaichi]

Betting on the house or stocks, that is the ultimate question :-)

There are too much uncertainty right now. I am leaning towards to buy stocks for now, with enough cash for 2-3 years. The housing market typically follows behind the stock market. Besides, there are much more overhead costs on the housing side. In times of good or bad, it needs to align with our life style. We do not have clear pictures on our life style yet.

I will reevaluate the situation as the situation plays out at the year end.

[Wintergreen78]

I’m in a similar boat to you. I live in central California and FIRED two years ago. Where I live the rent-buy math was so strongly in favor of renting that it won’t make sense to buy unless prices come down by 50%. If that happens, I expect any sort of unusual mortgage will be almost impossible to get and I’ll be cutting my expenses pretty dramatically.

What are the numbers in your area like for the break-even point when you compare renting to buying?