Is It Possible to Get a Mortgage After Retirement?

Is It Possible to Get a Mortgage After Retirement?

You may need a mortgage after retirement if you plan to relocate, downsize, or eventually move into your ideal house. Those on a fixed income, however, may find it difficult to qualify for a home loan. Nonetheless, creditworthy homebuyers can acquire a new home using income from retirement accounts and other investments.

Suggestions that might be helpful to follow, if you’re retired and considering a mortgage.

1 – Check Your Credit Score

If you’re getting ready to retire, you probably have a solid credit history. Check your credit score before applying for a mortgage after retirement so you know what to expect when you apply. Knowing your score ahead of time also allows you to make adjustments before speaking with a lender.

2 – Calculate Your Post-Retirement Income

When applying for a mortgage, a homebuyer’s income is another crucial consideration. Lenders normally want two years of income documentation when reviewing a mortgage application. If you retired more than two years ago, though, sending copies of your W-2s may not be as simple. You’ll have to present proof of Social Security, pension income, dividends, and interest payments instead.

3 – Your Debt-to-Income Ratio should be checked.

Your debt-to-income (DTI) ratio is the percentage of your gross monthly income divided by all of your monthly loan payments.

Looking for Alternative Financing

If you have a non-retirement brokerage account and are having trouble qualifying for a standard mortgage, you may be able to borrow against it. The amount you can borrow against the value of an asset is determined by the lender. Clients of Schwab, for example, may be able to borrow up to 70% of their qualified assets.

Keep in mind that, unlike mortgages, this financing arrangement often has shorter loan maturities (sometimes as little as five years) and higher interest rates. So, if you follow this route and wish to cut your monthly payment or rate, you’ll have to refinance it later with a mortgage.

Is It Necessary to Have a Mortgage in Retirement?

In an ideal world, you should not have a mortgage when you retire. Retirees are frequently required to take assets from their retirement accounts to fulfill mortgage payments, rather than conserving that money for future living costs.

However, it is not always possible—or wise—to pay off your mortgage before retirement. Using a significant percentage of your savings, retirement money, or other investments, for example, can leave you with no emergency fund.

Making big withdrawals from some investment accounts, on the other hand, might result in costly tax consequences and fines, as well as costing you more in the long term. You might be able to get a higher rate of return on your money if you invest it instead of paying off your mortgage.

Time to Make the Call

Are you trying to find an investment advisor? Look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial planner is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning, Tax-Efficient Strategies IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family.

We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!

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We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 1164620 – 12/21

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