How to get an asset based mortgage

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Doug007
Posts: 6
Joined: Tue Jun 06, 2017 5:27 pm

How to get an asset based mortgage

Post by Doug007 » Tue Sep 11, 2018 7:59 pm

Greetings,
I am looking at buying a new house prior to selling my current one. My problem is I cannot qualify for a mortgage because I do not have any earned income. I am FIRE and living off a slow withdrawal of my nestegg, which is all in a non-retirement account. I know I am unable to get a mortgage because I wasn't even able to get a HELOC on my current home when I tried a year ago, even though I own the home outright and the HELOC would only represent less than 20% of the home's value. It seems the banks rigid guidelines expect you to fit in their box and one of the key items is income- and without that they won't lend regardless of all other favorable circumstances (excellent credit, significant investment assets, 100% equity).
All of my investments are with Vanguard and I would need to liquidate 80% of all of it in order to pay cash for the new home. This I am trying to avoid.
I was wondering what other options I might have? Surely I am not the only one in this predicament. I have heard that maybe transferring my accounts to a brokerage house and then getting an asset based loan might work? I am not sure about that. I do not want to be hit with the capital gains tax to liquidate my vanguard funds though.
Thank you for your thoughts!

LarryAllen
Posts: 1122
Joined: Fri Apr 22, 2016 9:41 am
Location: State of Confusion

Re: How to get an asset based mortgage

Post by LarryAllen » Tue Sep 11, 2018 8:00 pm

Hard money loan on the house. Higher interest rate and a couple of points.

Gill
Posts: 4738
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: How to get an asset based mortgage

Post by Gill » Tue Sep 11, 2018 8:14 pm

I was in a similar situation at one time and the bank suggested I set up an automatic monthly remittance of $10,000 from my IRA, thereby increasing my “income” by $120,000 a year. They immediately approved the loan and I immediately cancelled the remittance before the first one was made. Everyone knew what happened but it was a hoop that needed jumping through.
Gill

schachtw
Posts: 98
Joined: Mon Jul 06, 2015 6:15 pm

Re: How to get an asset based mortgage

Post by schachtw » Tue Sep 11, 2018 8:53 pm

Doug007 wrote:
Tue Sep 11, 2018 7:59 pm
Greetings,
I am looking at buying a new house prior to selling my current one. My problem is I cannot qualify for a mortgage because I do not have any earned income. I am FIRE and living off a slow withdrawal of my nestegg, which is all in a non-retirement account. I know I am unable to get a mortgage because I wasn't even able to get a HELOC on my current home when I tried a year ago, even though I own the home outright and the HELOC would only represent less than 20% of the home's value. It seems the banks rigid guidelines expect you to fit in their box and one of the key items is income- and without that they won't lend regardless of all other favorable circumstances (excellent credit, significant investment assets, 100% equity).
All of my investments are with Vanguard and I would need to liquidate 80% of all of it in order to pay cash for the new home. This I am trying to avoid.
I was wondering what other options I might have? Surely I am not the only one in this predicament. I have heard that maybe transferring my accounts to a brokerage house and then getting an asset based loan might work? I am not sure about that. I do not want to be hit with the capital gains tax to liquidate my vanguard funds though.
Thank you for your thoughts!

My wife and I are retired, and plan on closing on a new construction condo in the spring of 2019.

Currently, our income stream is comprised of:
Wife’s pension and social security
My spousal social security (will file for my own benefit when we close).

We have contacted three lenders, and all are willing to underwrite an ‘asset depletion’ mortgage. As I understand this, they look at the total assets (investment, retirement, pension, etc.), and use this aggregate figure to determine eligibility. ARMs are the only mortgage type available with this type of loan.

FYI: we are putting 25% down; we set aside cash for the down payment three years ago. We won’t have to sell any holdings.

Hope this helps.

delamer
Posts: 6276
Joined: Tue Feb 08, 2011 6:13 pm

Re: How to get an asset based mortgage

Post by delamer » Tue Sep 11, 2018 10:04 pm

What about a portfolio lender?

They keep their loans in house, and so don’t have to meet all the various government requirements for lending.

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