A brokerage account or retirement savings
Transfer payments like Social Security and your pension
Invested assets
Household income (income from non-borrowing household members)
2. How will lenders calculate my income?
If you are not employed, there are two methods that lenders will use to calculate your income. Take note that if you receive transfer payments, those will be included in the computation for your income in both of these methods.
3. What are the factors that can affect the approval of my mortgage application?
Aside from the above, some of your other financial details will also be subject to the lender’s scrutiny.
Post-closing liquidity: Your lender would also want to see your available liquid assets after closing, and they usually require that you have assets that could cover at least 6 months’ worth of housing expenses. This is calculated by adding up all of your verified financial assets and then subtracting the closing costs and equity for the loan.
4. How much is the usual down payment?
The amount of down payment you would have to give is dependent on the method used for determining your income.
5. What are my other options aside from getting the usual loans in the market?
Reverse mortgage: Also known as the Home Equity Conversion Mortgage (HECM) for purchase program, it is a kind of loan that can delay repaying the mortgage (principal or interest) until the house is sold or until the death of the borrower.
1. Getting a mortgage for your primary residence will result in a lower interest rate,
while a mortgage on a home that will be used for vacation or investment
purposes will have higher interest rates.
2. If you can, make extra mortgage payments. If you can afford to pay more than what the lender calculated, you can arrange to have the monthly payment increased. This can shorten the time you would have to pay for the mortgage and could decrease your monthly payments over time, and decrease the amount of interest you need to pay on the
mortgage overall.
3. If you plan to take out a hefty amount of cash for the down payment from an IRA or another tax-deferred retirement plan, take note that you might also be placed in a higher tax bracket.
4. Know about the consequences to inflation hits or a great increase in your property taxes. You also have to consider having a financial contingency plan should there ever be medical emergencies, or a price increase in your health insurance. Take these into account and get an estimate if you can still cover these events on top of your mortgage.
