Tuesday, May 7, 2013

Unique Situation for Retired NOVA Homebuyers

In a new article from the New York Times, it is suggested that retirees trying to obtain a home mortgage may find that their great credit history and healthy retirement accounts are not enough. It turns out, lenders are also looking for a consistent monthly income to go along with their usual debt-to-income standards. 

 For some NOVA homebuyers, they expect that making a purchase, with interest rates as low as they are, would be as easy as it has in the past. But that is just not the case as of late. The problem retirees are facing on the current real estate market has to do with their income.

 According to Richard Pisnoy, a principal of the Silver Fin Capital Group, when lenders look at dividends, they want to see a regular annual amount on the tax return paid out over at least the last two years. If retirees are supplementing their incomes with part-time positions, lenders want to confirm the buyers are actually employed at the moment of their mortgage application. 

 Social security paid to retired homebuyers is always counted as their income, but borrowers should also be aware that Fannie Mae guidelines allow lenders to increase that income by 25 percent if the beneficiary isn’t paying taxes on it, Pisnoy stated.

 And while some lenders are still issuing loans without confirming homebuyer income, their interest rates and down payments are higher— some at 30 to 40 percent.

 So what's the solution? A program called asset depletion is being used by lenders to qualify retired homebuyers. It involves taking a fraction of one's assets, amortizing it, and applying it as income. Retired Northern Virginia homebuyers may have a difficult time obtaining a home mortgage with current lending standards, but it is by no means impossible.
Earle Whitmore
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