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lsolano82 · Joined: 28 Feb 2010 Posts: 5 1.76 Dollars($)

Can a person that is retired purchase a home?

gmakerley · Posted: Tue Mar 02, 2010 10:10 am Post subject:

absolutely - anyone at or over the age of majority can purchase a home. what's required, of course, is that you have sufficient income to support the payments required if you need a mortgage loan for that purchase. you didn't mention borrowing money, but that's pretty much a given in this country anyway.

as long as your credit is clean enough, you don't have excessive debt and you have sufficient assets and income, you'd be a viable candidate to purchase and obtain a mortgage.

lsolano82 · Joined: 28 Feb 2010 Posts: 5 1.76 Dollars($)

I apologize, I should have been more specific. Someone who just retired is interested in purchasing a home and abviously getting approved for a loan.. but she was converned that because she is retired she will not be able to get qualified.

gmakerley · Posted: Tue Mar 02, 2010 10:33 am Post subject:

it's going to depend on the income level, frankly. if the debt load isn't excessive, and all the other factors are favorable, there's no reason a retiree can't get a mortgage.

Posted: Wed Mar 10, 2010 12:15 pm Post subject:

If an early retiree (55+ with excellent credit and no debt) has no salary, minor rental income ($2-3k/month), and assets (equities and paid-off real estate) in the $5mm+ range, is it possible to get a traditional mortgage with the usual amount of fees or does that person have to pursue a more expensive and/or cumbersome option?

I know the traditional mortgage calculation requires income, but it seems crazy that a person with this asset profile would not be considered a good loan candidate.

Assume that the person wants to buy a $1mm house and can pay $350k down, but doesn't want to sell $650k in stocks/mutual funds at one time. Thanks for any insight!

gmakerley · Posted: Wed Mar 10, 2010 1:36 pm Post subject:

it may seem crazy but the standard procedure is that a borrower must be able to demonstrate affordability of the mortgage being sought. if your rental income is sufficiently high to offset all the expenses of the house you noted, along with tax & insurance expense on those rental properties, then you'd have a shot at a conventional loan.

if not, you're right that you'd have to pursue the other options.

Posted: Wed Mar 10, 2010 1:57 pm Post subject:

Thanks for the reply.

I guess what makes me think it's crazy is how does steady income "demonstrate affordability" better than possession of relatively liquid assets? How is a person with a $200k job a better candidate to pay back a loan than someone with $5mm in debt-free assets, assuming both are willing to put down 35%? Is it something substantive that I'm not seeing or is it just a part of some mindless formula? I mean, if affordability is the question, I don't think there's a way to legitimately say that someone with big liquid assets and no debt cannot "afford" to make payments. From a common sense standpoint, I can't imagine that if I were lending my own money, that I'd see the person with a future income stream as a better loan risk than the person with current assets.

Not criticizing you, by the way... just trying to wrap my head around the system. Thanks for any additional insight.

gmakerley · Posted: Wed Mar 10, 2010 2:11 pm Post subject:

i didn't take it as criticism. after all, i don't make any of the rules (oh, would that i could!).

i thoroughly understand where you are coming from with this. do you generate income from your assets? that will be helpful in anyone trying to qualify you. of course, such income would need to be averaged over a 2-year period (again, the standards).

standardized qualifying obviously makes for a secondary market that can be managed from that standpoint. since virtually every lender is involved in the secondary market (read fannie/freddie), the standards that have been established reach out across the entire nation.

i often suggest people check in with their local community banks and credit unions as alternatives to the big players - that might stand you in good stead.

Guest

My father is willing to secure a mortgage for me (I would make the down payment and pay the monthly mortgage) however he is retired. His home is paid for and he has plenty of collateral. Would he be able to secure a conventional loan for $150,000 or would he have to secure the loan for an investment/income property? Or is there another option available? Thank you.

jameshogg · Posted: Tue Dec 07, 2010 11:58 pm Post subject:

Hi Al,

If your father takes out a mortgage on the property which is not his primary residence, then it will be considered as your father's investment property.

Thanks

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can a retired person buy a home