Obtaining a mortgage

[taylor111947]

My understanding is that with the new lending laws, mortgage approval is based upon your fixed income. When I retire, my fixed income (pension, social security) will be supplemented by my investment income. While combining the two leaves me financially comfortable, I'm afraid that my fixed income won't allow me to qualify for the mortgage I would like to have. Has anyone else come across this problem? I'm wondering if I should consider buying in TV while I'm still working. I'm putting my house on the market early next year and hope to move/retire in June. Also, I have been pre-approved for a mortgage (based upon my salary), but I'm not sure what that means - can someone enlighten me?

[Russ_Boston]

My understanding is that with the new lending laws, mortgage approval is based upon your fixed income. When I retire, my fixed income (pension, social security) will be supplemented by my investment income. While combining the two leaves me financially comfortable, I'm afraid that my fixed income won't allow me to qualify for the mortgage I would like to have. Has anyone else come across this problem? I'm wondering if I should consider buying in TV while I'm still working. I'm putting my house on the market early next year and hope to move/retire in June. Also, I have been pre-approved for a mortgage (based upon my salary), but I'm not sure what that means - can someone enlighten me?

If you can swing it I'd say to get the mortgage now (or just slightly before you stop working). It's a lot easier based on the higher job salary. You could even time it so that you move into TV very shortly after signing the mortgage. This is pretty much the same choice that we just made. We decided to buy now while prices and rates are low and move in within the next year or so. Yes it means that we run the risk of carrying two homes but we can swing it (or not move to TV perm) until our MA home sells.

I don't know about adding investment income to mortgage qualifications.

[redwitch]

Russ pretty much summed up why to buy now. As to the pre-approval, it simply means that if you find a home you like, you will more than likely get a mortgage given your credit report and claimed income at the interest rate at the time the pre-approval was done. It is not a guaranty of a mortgage. It is simply something to show sellers that you are a serious buyer and would more than likely be able to get a mortgage. A standard pre-approval letter has enough hedges in it to fence in all of at least one village in TV.

[Frangyomory]

We were fully retired for 4 months when we applied for a mortgage. We used our bank in Virginia, who held most of our assets, for the loan. Might try that.

[natickdan]

I'm retired and my wife will retire next spring. We were going to wait until next spring to buy in TV, but decided that buying now made more sense. Although I didn't expect any issues with qualifying for a mortgage based on my retirement income and savings, being able to include my wife's full-time employment on our application removed all of our concerns.

Our logic with buying in TV now was based on the current property values and that interest rates are still low ( although not as low a few months ago). It was this combination of home value and low interest rates that made the timing right - for us.

Although we'll have to support two homes, we're confident that it won't be a problem for the short term. Our plan is to put our current home ( 10 room, 5 BR ), which is west of Boston, up for sale next spring. Once sold, we plan on purchasing a small 2 BR condo locally and then happily splitting our time between TV and Natick, MA. As time progresses, we'll spend more time in TV.

Given that it is now snowing here, I really, really, can't wait to move in to our new home next month. Best of luck with your decision!

[kandj]

but we had the mortgage on our NH that was almost paid up. We had two problems going for us. We knew my job was going to be outsourced and we weren't certain that I would be "picked up" (luckily I was) And we knew his plant was going to close sometime next year.

So, last year we went in to our bank and told them what we wanted to do (without expaining the impending job situation). We told them wanted to get as much equity out of out current home as we could without any worries about going under water so we could buy a place in FL. They sent someone out to appraise our property and came back to us with a figure. That way we could buy down in TV with cash. We did a REFI - 30 mortgage - with no intention of keeping it that long! The rate was lower and the term was longer than what we originally had so the montly payment stayed very close to what it had previously been. The only difference was that we had to make montly escrow payments for the taxes that we had not previously had to do. We had always kept that money aside on our own - so no biggie. That gave us an idea of how much we could spend down there and gave us ability to hold off up here on selling without having to have a "fire sale".

We are about to put our house on the market up here and we know how much we need to make it worth our while to sell. We know what our "bottom line" is if we find someone that wants it before we upgrade the carpets, kitchen and baths. Each thing that we do will increase the value and of course our "bottom line".

[golfnut]

mortgage/retirement does not compute...gn

[Lucko]

We refinanced in Oct. 2009 and had a year to refinance for free if rates went down -- Rates went down and in Sept. 2010 we ask to refinance for free and were told O.K. a no-brainer, just update your accounts and income tax forms -- Two weeks later we were suprised by a call that said no can do, the bank can't resell the mortgage and are not keeping any loans under 5% -- We have fico scores over 800, no other loan payments, a six figure income, seven figure net worth and have never ever been late for anything -- Why I ask ??? Well is seems that since I wrote off some stock losses and erased my taxes due last year, I am being denied because NOW the loan amount is based on your TAXABLE INCOME !!!!!!!!! Thanks Fannie, Freddie and Obama !!!!!! If you want a loan, pay enough taxes to cover your amount as determined by the new charts and plan way ahead !!!!!!!!!!!!!!!!! This is another CHANGE that I did not vote for !!!!!!!!!

[cybrgeezer]

mortgage/retirement does not compute...gn

Amen!

[nkrifats]

mortgage/retirement does not compute...gn

Each of us look at this differently but I have to agree. In my case it did not compute.

[iandwk]

We are about to put our house on the market up here and we know how much we need to make it worth our while to sell. We know what our "bottom line" is if we find someone that wants it before we upgrade the carpets, kitchen and baths. Each thing that we do will increase the value and of course our "bottom line".

You might want to consider talking to a real estate agent before you sink a lot of money into improvements expecting to increase your home's value. What that does is increase curb appeal, not appraised value. I sold real estate in Georgia and ran into this several times. Most people think that if they spend $10,000 on a new kitchen, it increases the value of their house by at least that much. The only way it can add value to the house is if it was in deplorable condition to begin.

My wife and I did a lot of work on our house before putting it on the market, and it increased the curb appeal and made the buyer more willing to buy the house. In that sense, you may get a bit more because of the newness of the upgrades and it may make your house sell quicker, but rarely do you get your money back. We considered ours an investment in getting ours sold quickly so we could move down here.

[natickdan]

I agree that the majority of financial planners would suggest it is most ideal to be mortgage free going in to retirement. That's what our financial proposed almost 10 years ago and he helped put us on the path to pay off our mortgage.

Until we close in TV next month, we were one of the fortunate ones to be mortgage free. I say "fortunate" because I recognize this is not possible for many entering retirement - especially in the current economic climate. In that case, if you can afford the mortgage payment without compromising the type of retirement you want, then go for it.

As empty nesters, our plan is to sell our current home this spring and then use the proceeds to purchase a two bedroom condo in our town and then pay off our TV home. Again, we hope to me mortgage free next year. Until then, we can afford carrying the expenses on both properties.

Best of luck with your decision.

[kandj]

You might want to consider talking to a real estate agent before you sink a lot of money into improvements expecting to increase your home's value. What that does is increase curb appeal, not appraised value. I sold real estate in Georgia and ran into this several times. Most people think that if they spend $10,000 on a new kitchen, it increases the value of their house by at least that much. The only way it can add value to the house is if it was in deplorable condition to begin.

My wife and I did a lot of work on our house before putting it on the market, and it increased the curb appeal and made the buyer more willing to buy the house. In that sense, you may get a bit more because of the newness of the upgrades and it may make your house sell quicker, but rarely do you get your money back. We considered ours an investment in getting ours sold quickly so we could move down here.

I should have stated perceived value. The carpets should have been replaced a while back. They are worn and there are some stains that I could not get out. We kept going back and forth about whether to go with wood, "pergo" or carpet but now it is going to be whatever is easiest to "freshen it up".

[Russ_Boston]

I agree that the majority of financial planners would suggest it is most ideal to be mortgage free going in to retirement.

This really does depend on situation. At today's rate (4.X%) with an effective rate after tax deductions (assuming you make under the limits) of 3.X% it can make sense investment wise. That is, assuming of course, that you can find investments that make more than 3.X%. You're not going to do it in a savings account but the investment world is much bigger than savings accounts:)

Personally I just closed on my mortgage with Citizens today. I have no intention of paying off my new 30 year mortgage any sooner than it is due. But plans do change and I can always decide to do it later if it makes financial sense.

[skyguy79]

Personally I just closed on my mortgage with Citizens today.Presuming it was also a home closing in TV, congratulations! We hope to be joining you in a little more than three weeks if no hitches come up in our mortgage application... not that we anticipate any. Good luck on your new home!

[Russ_Boston]

Presuming it was also a home closing in TV, congratulations! We hope to be joining you in a little more than three weeks if no hitches come up in our mortgage application... not that we anticipate any. Good luck on your new home!

Yes, Abbey Way in Buttonwood. Been planing this for over 6 years!

[Shimpy]

I agree that the majority of financial planners would suggest it is most ideal to be mortgage free going in to retirement. That's what our financial proposed almost 10 years ago and he helped put us on the path to pay off our mortgage.

Until we close in TV next month, we were one of the fortunate ones to be mortgage free. I say "fortunate" because I recognize this is not possible for many entering retirement - especially in the current economic climate. In that case, if you can afford the mortgage payment without compromising the type of retirement you want, then go for it.

As empty nesters, our plan is to sell our current home this spring and then use the proceeds to purchase a two bedroom condo in our town and then pay off our TV home. Again, we hope to me mortgage free next year. Until then, we can afford carrying the expenses on both properties.

Best of luck with your decision.

When we bought our home in Buttonwood we were going to pay it in full, but decieded to make a large downpayment and keep the rest of the cash in the bank. Cost us a little more in interest, but the interest is low and it's nice to know the money is there for emergencies should we need it. We'll never live long enough to pay off a 30 year mortage, but our heirs will have to worry about that. They'll still come out ahead.

[Russ_Boston]

Your heirs won't have to worry about it, they'll just have less proceeds when/if they sell the house. Granted you might want to leave them as much as possible but I wouldn't think of it in terms of burden.

[Tbugs]

Any real estate agent worth his license would tell you that the interior of the house has to look good before you put it on the market.

If the carpet is worn or stained, a buyer knows it will have to be replaced but may not have the money to do it right away so they will look at more houses. Go to an inexpensive carpet store like Empire and have them put in a medium priced carpet. It will look fine and a buyer will know it is good enough for a few years.

If the kitchen floor is old vinyl, have it replaced with a laminate floor. It will look much better and is not expensive.

Paint the walls in a neutral color. It is not expensive and makes it look fresh.

I also urge everyone to use BOTH a Villages Realty agent AND a non-Villages agent (like ERA Realty) in order to see properties in The Villages but not listed with Villages Realty. Buying a resale home makes sense, too. You can negotiate price, the bond is lower by thousands of dollars, mature landscaping, established neighborhoods, safer than the new areas by Wildwood, and no construction going on.

Add in a few thousand dollars of upgrades and you will sell the house much faster - thus not having to pay more than one mortgage when you move.

I did all these things - and sold my house in Maryland - during the housing slump of 2009 - at the asking price and in 8 days!!! If I had not done the upgrades, it would have been a lot longer I am sure.