Athen Apaquette

Quora link: If you’re retired, where would you preferably go to acquire a mortgage?

Fixed income is not a deal killer! Technically, you can go anywhere to get a mortgage. Many retired people think that there are special rules or restrictions against “fixed income people”. But that’s not true. If you qualify you qualify. Lending institutions cannot discriminate for age (and many other things but this is the one we are talking about).

However, and yes you know there’s always a “but”, you do have to qualify with a steady stream of income for the typical loan and to get the best rate.

The conventional or agency guidelines (those set by Fannie Mae and Freddie Mac) tell us (lenders) that we need to verify that you have to have a 2-year history (in the past – unless it’s newly started guaranteed income) and a demonstrable likelihood of the income going forward for 3 years.

Not you? If you don’t then that’s where you need to avoid the banks and go to a lender who has many funding sources. These lending entities are called mortgage brokers and mortgage bankers. This is here in the US and Canada. Other countries have other systems and I am not versed in those.

As a loan officer for 30 years, I have always worked for small agile firms who are a hybrid of broker and banker. That way I knew I could seek out the solution my clients need, not have my hands tied but what the big bank will or won’t do or offer.

Let me give you an example of the fixed income profile:

If you are on a pension (defined benefit plan) or social security then it’s a matter of counting up your monthly income and seeing if you qualify under the traditional debt-to-income ratio.

If your social security benefit is $1500 and your pension is $1000 then you have a total income of $2500 and can afford a mortgage payment, with taxes and insurance and consumer debt of $1125.

But what if that is not enough?

Another example fixed income plus passive income:

Let’s say you have $2500 in income as above but you also have rental income from properties of $2000 net on your tax return then we count that as well. That gets you up to $2025!

What if that isn’t enough or you don’t have rental income?

Another example: you have that income above and liquid assets in 401k, IRAs …

We can count that asset or those assets as income by using a calculation of counting income that could come from that even if you are not currently taking the income.

We call this asset depletion method

What if you have no steady income?

Then we use the asset depletion method.

Obviously, as a retiree you can also do a reverse mortgage if you don’t qualify or don’t want to make payments.

I would say your best shot at getting the best mortgage is by going to a highly reputable mortgage broker/banker who offers all these programs and will match you up to the best option for your situation.

About Athena Paquette

If you are unsure of your eligibility, you can contact Athena Paquette Mortgage Consulting for more detailed information. As a mortgage broker, Athena has consulted many clients over the years with mortgage and home advice.