Getting a mortgage when retired?

jane__nyNovember 12, 2010

Is it possible? With housing prices so low my husband and I would rather take a mortgage on a house than use our cash. Does anyone know if banks would consider this?

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dave_donhoff

Hi Jane,
Sure. You simply qualify based on your retirement income sources, its done all the time.

Luck,
Dave Donhoff
Leverage Planner

    Bookmark   November 12, 2010 at 11:22PM
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beachlily z9a

Honestly, when we retired, we paid cash. No mortgage payments to follow us into old age. Can't imagine the stress of paying a mortgage. There are other things to worry about--health, economy, hurricanes, etc. We have no children and don't want to make my brother-in-law wealthy when we pass. Maximizing return on assets isn't a concern. We live off our retirement income. I retired at 51 and my husband at 55, ten years ago. We have never spent any of our personal assets. One home, three cars, and living better than we ever did when we worked!

When we worked, I was a financial analyst and husband was a senior banker. We DO understand the value of money and feel very comfortable with our current decisions.

    Bookmark   November 13, 2010 at 7:57AM
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maddielee

Yes you can. We are retired and easily qualified. Interest rates are so low right now, it was better then using our cash.

ML

    Bookmark   November 13, 2010 at 10:51AM
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bus_driver

Without inflation, it is more expensive to finance than to pay cash since the interest must be paid. On a 30 year mortgage, the total of interest is far greater than is the original principal amount. But if one thinks that inflation will roar in within a few years, and I do believe so, financing may be the really smart way to go, especially for younger people.

    Bookmark   November 13, 2010 at 5:25PM
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kats_meow

It depends on source of income. If it is Social Security and pension for example fine. But, income from an IRA might be more tricky since that is something you can turn on or off.

    Bookmark   November 13, 2010 at 7:06PM
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krycek1984

bus, deflation is the larger concern now and in the immediate and mid-term future...especially in real estate.

    Bookmark   November 13, 2010 at 7:16PM
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jane__ny

Thanks, I'm surprised as I didn't think a bank would consider retirement income as income. We lost almost half our Keogh during the crash and are trying to make up lost time. We are renting now but would like to buy. We don't want to use our cash as we are trying to build it back up. My husband is actually still working part-time but would like to quit completely this summer.

Great information!

Jane

    Bookmark   November 13, 2010 at 10:35PM
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jane__ny

I forgot to mention, what about age? Wouldn't a bank be gambling on someone 75 yrs old applying for a 30yr mortgage?

    Bookmark   November 14, 2010 at 4:06PM
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beachlily z9a

They are not allowed to discriminate.

    Bookmark   November 14, 2010 at 5:07PM
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dave_donhoff

Jane,
the term of the amortization is meaningless relative to risk to the bank. They are covered by the amount of subordinate equity and the stability of your retirement income.

Dave Donhoff
Leverage Planner

    Bookmark   November 14, 2010 at 7:14PM
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dave_donhoff

Jane,
To put it another way;
In the last 8-10 years or so, the majority of *ALL* 30 year mortgages put in place have been paid off by their 3rd year (due to refinances, sales, or foreclosures.)

If YOUR mortgage lasts longer than that, all the better as far as the banks are concerned.

Cheers,
Dave Donhoff
Leverage Planner

    Bookmark   November 14, 2010 at 7:25PM
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jane__ny

I'm amazed. Never thought it was possible. Thank you Dave for rephrasing your answer. I was lost at first.

Jane

    Bookmark   November 15, 2010 at 12:44AM
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