Author Topic: Getting a mortgage after retirement  (Read 2904 times)

RedmondStash

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Getting a mortgage after retirement
« on: April 05, 2016, 08:14:24 PM »
It looks like there were recent legal changes to make it easier to get a mortgage post-retirement. The trick is that you have to be:

a) able to access your retirement account(s), and
b) not accessing the accounts for income.

Or at least you have to have income from one or more accounts that you aren't using as, you know, income. Weird. But possibly helpful.

http://www.hsh.com/finance/mortgage/retirement-home-buying.html

forummm

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Re: Getting a mortgage after retirement
« Reply #1 on: April 05, 2016, 08:29:56 PM »
Interesting to know. Thanks for posting.

It does sound too restrictive to be of much use for early retirees.

Quote
You also must be fully vested with complete access to the funds without incurring a penalty for early withdrawal.

Sounds like you need to be 59.5 or have a lot of money in your Roth that is a contribution (either directly or via a conversion).

Drifterrider

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Re: Getting a mortgage after retirement
« Reply #2 on: April 06, 2016, 07:00:55 AM »
When you say "post retirement" do you mean if not receiving a retirement check?

GrOW

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Re: Getting a mortgage after retirement
« Reply #3 on: April 06, 2016, 07:23:27 AM »
Interesting read. Thanks for sharing, RedmondStash.

"In order for the money to be counted, you can't be using these assets for current income, not even the dividends or interest from the investments."

This is a head scratcher. So in order to count income from investments, you cannot have a current verifiable income stream from those investments. Huh???  I have to believe this has a specific application like keeping a borrower from double dipping. What I mean is that if I have 1040 income from the investments, I cannot also use this calculation to "create more income from the same money".

The trick would be how the hell does the underwriter tell if interest or dividends are used as "real" income or are just part of your accumulation phase of investing. That would put the underwriter in a tough spot which may mean they go the safe route and frustrate borrowers.

RedmondStash

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Re: Getting a mortgage after retirement
« Reply #4 on: April 06, 2016, 08:28:51 AM »
When you say "post retirement" do you mean if not receiving a retirement check?

Dunno, Drifterrider. The article isn't that long; there may be better info out there somewhere. It just seemed interesting.

jooles

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Re: Getting a mortgage after retirement
« Reply #5 on: April 06, 2016, 12:08:50 PM »
A work-mate of my husband recently had a very hard time finding a mortgage after retiring.  They ended up funding the house with cash and are still trying to find a lender who will offer them a mortgage on the property.  It is new construction in a great location.  I don't know all the details, but to hear them tell it the problem is simply that they are retired.

shotgunwilly

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Re: Getting a mortgage after retirement
« Reply #6 on: April 06, 2016, 03:52:23 PM »
A work-mate of my husband recently had a very hard time finding a mortgage after retiring.  They ended up funding the house with cash and are still trying to find a lender who will offer them a mortgage on the property.  It is new construction in a great location.  I don't know all the details, but to hear them tell it the problem is simply that they are retired.

This just blows my mind about banks.  They will offer a mortgage to someone that has almost nothing but a job, but won't offer the same mortgage to a person that can prove that they could pay cash for the house on a whim. ???

forummm

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Re: Getting a mortgage after retirement
« Reply #7 on: April 06, 2016, 04:59:54 PM »
A work-mate of my husband recently had a very hard time finding a mortgage after retiring.  They ended up funding the house with cash and are still trying to find a lender who will offer them a mortgage on the property.  It is new construction in a great location.  I don't know all the details, but to hear them tell it the problem is simply that they are retired.

This just blows my mind about banks.  They will offer a mortgage to someone that has almost nothing but a job, but won't offer the same mortgage to a person that can prove that they could pay cash for the house on a whim. ???

It's because of Fannie and Freddie's standards. Mortgages are generally sold that adhere to their standards so that they can be easily bought and sold (to Fannie or Freddie--or to another institution). The rules are less than optimal. A person with 7 figures in a retirement account should be able to buy a $200k house with 20% down, even if they might possibly need to pay a penalty to access that cash. It's just common sense. I don't know why the people making the rules don't see that.

GrOW

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Re: Getting a mortgage after retirement
« Reply #8 on: April 06, 2016, 05:02:42 PM »
A work-mate of my husband recently had a very hard time finding a mortgage after retiring.  They ended up funding the house with cash and are still trying to find a lender who will offer them a mortgage on the property.  It is new construction in a great location.  I don't know all the details, but to hear them tell it the problem is simply that they are retired.

This just blows my mind about banks.  They will offer a mortgage to someone that has almost nothing but a job, but won't offer the same mortgage to a person that can prove that they could pay cash for the house on a whim. ???

Mortgage guidelines are built to support the masses. Banks/lenders may have common sense but if they cannot sell your loan or avoid audit issues, it is a bad loan to them.

PhysicianOnFIRE

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Re: Getting a mortgage after retirement
« Reply #9 on: April 06, 2016, 08:40:47 PM »
I wonder how a taxable account is taken into consideration.  I'm happily debt free, but I've thought about the possibility of a mortgage perhaps being in my future again someday after I retire.  I hadn't considered the fact that it might be difficult to get one without earned income.  I would have plenty of collateral.