🏡 Retirement Doesn’t Necessarily Mean You Can’t Qualify for a Mortgage
🏡 Retirement Doesn’t Necessarily Mean You Can’t Qualify for a Mortgage
One misconception I hear is:
“Once I retire, I probably won’t qualify for another home loan.”
That isn't necessarily true.
Lenders aren't simply looking for a paycheck. They are looking for qualifying income and financial resources that meet the particular loan program's requirements. And guess what? Your age is not a factor.
For example, current Fannie Mae guidelines allow qualifying income to include certain pension, annuity and retirement-account distributions when the applicable documentation and continuance requirements are met.
And here is something many people may not know: under certain Fannie Mae guidelines, eligible employment-related assets such as a 401(k), IRA, SEP or Keogh account can potentially be converted into a monthly qualifying-income calculation, even when regular distributions haven't already been established. There are specific requirements, including restrictions on loan-to-value and the type of property and transaction. Borrowers age 62+ may qualify for a higher permitted LTV under this particular provision.
Retirement accounts may also be acceptable sources for a down payment, closing costs or reserves when the applicable requirements are satisfied.
Why does this matter in Palos Verdes?
I meet homeowners who would like to downsize but assume they can't buy their next home because they no longer have a traditional salary.
Before deciding that your only choice is to pay all cash—or that you can't move at all—I think it's worth talking with a knowledgeable lender.
There may be options you haven't considered.
If you're thinking about downsizing or buying during retirement, call me before ruling anything out. I work with excellent lenders who can look at your individual financial picture and explain what may be available. And if your move involves tax, trust or estate-planning questions, I can also introduce you to trusted CPAs and estate/trust attorneys.
Sometimes the first step isn't finding the house.
It's finding out what's possible.
General real estate and financing information only. Loan programs, underwriting and qualification depend upon the borrower and lender.