Financing in Decatur>Question Details

Scott, Home Buyer in Decatur, GA

Can I get a home mortgage based on assets instead of income?

Asked by Scott, Decatur, GA Fri May 24, 2013

Here's my situation. I'm retired from a company where I worked for 17 years and draw a small pension ($1,100 per month) from that firm. So far, three lenders have said I don't qualify for a mortage because my income stream is so low; however, I have $700K in assets, but none of the lenders I spoke to would consider the assets. Do I have any other options? If push comes to shove, I'll pay cash for my new residence, but I want to explore the mortgage route a bit longer, unless it's a total waste of time. Any advice is appreciated.

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Scott, one way you may want to consider is talking to someone either from your current financial adviser or a person from a financial company like Morgan Stanley or Merrill Lynch, for example. These financial institutions allow you to pledge your assets as collateral and then borrow from them at an extremely low rate for any use you prefer. If you don't pay, they liquidate the assets to pay off the loan.

While your assets sit in the account, they are accruing interest, so you're not losing money while it sits there. The company sets up a separate account for the loan. Therefore, on one hand, money is being made on the assets and in another hand, the loan is accruing interest to be paid back. You can then make payments to the loan until paid off just as if you had a regular loan.

Another option is to wipe out any debt that you might have (keeping the accounts open of course) and using your pension to qualify for a loan. If you are open to that idea, then talk to Rodney about qualifying for a home using your pension. A $100,000 house may be attainable if the taxes and insurance are in line and enough down payment is used (credit allowing).
0 votes Thank Flag Link Tue May 28, 2013
Hi Scott,
The general answer to that question is no. A mortgage loan is going to require verificaiton of an income stream for you to be able to qualify for a mortgage.

When someone is of retirement age and they are taking regular monthly disbursements from their 401K/IRA, then that monthly amount can often be treated as Qualifying Income. The account balance must contain sufficient funds for the amount to continue for at least 36 months. A two month history of recieving the money is typically required.

An example would be $300,0000 in a 401K and $3,000/month is being withdrawn. That would be acceptabe since at least 36 months remains in the retirement account. Someone with $75,000 in a 401K and taking out $3,000/month would not meet that requirement since they would only have around 25 months remaining, not 36+ as required.

What you cannot have is the $700K in a regualr checking/savings account. The money needs to be from a retirement plan. Income from Capital Gains can sometimes also be used. You would need to document both a 2 year history of receiving it along with documentation that you still have the assets after closing.

If you are looking to purchase a property, working with a knowledgeable and seasoned loan officer is critical in today's market. Getting Pre-Qualified is the only way for you to find out your mortgage options. To get Pre-Qualified for your purchase, you can submit your request online at http://www.rodneymason.com.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of mortgage lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
0 votes Thank Flag Link Fri May 24, 2013
Rodney, Thanks for responding. You wrote, "The account balance must contain sufficient funds for the amount to continue for at least 36 months. A two month history of recieving the money is typically required." I've gotten different answers about how long a person needs to have been receiving disbursements. One lender told me two years, another one year. You're saying two months. Am I reading that correctly? I have enough in my 401K to cover 36 months, but I just started taking disbursements.
Flag Sat May 25, 2013
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