Is it easier to buy a home before retirement than after retirement?

[pastoral]

If you are taking mortage to buy a home, is having income (i.e. buy before retiring) better in the eyes of the lender, compared to no income (in retirement) but more net asset?

 

[38Chevy454]

Yes, buying with a W-2 type income is less trouble. Lenders are like the gov't in that things are set up to run a certain way, and doing it different goofs up the process. You can still get a mortgage being retired and not having W-2 income, but it is more trouble. Sometimes the lender requires you to have regular withdrawal income for example, even if you have sufficient assets to pay for the house in full.

 

[punkinhead]

I'm curious too since we plan to move next year. We've been retired for a few years and bought a new motorhome a few weeks ago. We wanted a bridge loan so that we could get the new one then sell the old one. It took over a week to secure a loan because we haven't borrowed money since our mortgage in 1993 which has been paid off for almost 20 years. The lenders said we have "shallow credit" because we have no borrowing history. We were finally able to get a loan by sending them statements from all our IRAs, listing all our other assets (motorhome, cars, airplane, motorcycles), and giving them 2 years of tax returns. At least when we get a bridge loan next year to switch houses we'll have established credit with our RV loan which should be paid off by August.

 

[pastoral]

That's interesting. I don't have borrowing history at all, I thought I was a model citizen .

 

[Koolau]

We found that they don't care much about your assets. They want to see income. BUT they count some bizarre things as income. For instance, when we took out our last mortgage, we showed them our last 3 1040s which showed us taking large withdrawals from my 401(k) (thus taxable income) and then (wait for it) converting to a Roth IRA. So, even though our assets really weren't spent (except for the taxes we paid) it "looked" like we had a lot of income because the IRS considered it to be income! Go figure.

 

[FlaGator]

The comments above highlight that getting a mortgage is seldom a simple process, whether working or not.

I've done 1 purchase and 2 refi transactions since giving up the paycheck. I did not find any of them onerous, nor ever felt the approval was at risk. I knew I would be buying after retiring and wasn't concerned about getting approved for what I was comfortable financing.

Do your own math before talking to a lender/broker. If you're comfortable with the monthly PITI and it's in the range of ~30% of your demonstratable income, you should be OK.