Retirees who take the right steps and avoid these common pitfalls can qualify for a mortgage for their Delaware retirement home.
In today’s Ask The Broker video, Kathy invites guest Pete Green of Atlantic Bay Mortgage Group to discuss if retirees can obtain a mortgage to purchase their retirement home and what they can do to qualify. Learn what things you should avoid that would keep you from qualifying and when you should start taking action to start the financing process.
Kathy Sperl-Bell: Will I be able to get a mortgage to buy my retirement home in Delaware? Hi. This is Kathy Sperl-Bell at Active Adults Realty in Delaware. Today I’ve invited Pete Green from Atlantic Bay Mortgage. He’s our expert and I’ve asked him here to help answer these very important questions.
Kathy Sperl-Bell: So Pete, let’s start with, can a retiree get a mortgage to finance their retirement home?
Pete Green: Absolutely. There are a lot of myths out there and it is more challenging to obtain a mortgage when you’re a retiree, but using a skilled lender, someone who is highly experienced with working with retirees is the way to go. You can get a mortgage to purchase your retirement home.
Kathy Sperl-Bell: So let’s start with, what are some of the things that they should not do? What are some of the don’ts?
Pete Green: Great question. So there are a lot of things that all buyers do and retirees that kind of can create problems or a barrier to getting a mortgage. Some of them are co-signing children’s or grandchildren’s loans because those loans show on your credit report, therefore, count against your debt ratio.
Kathy Sperl-Bell: Because they’re just sure those kids are not going make a payment.
Pete Green: Oh right. Absolutely.
Kathy Sperl-Bell: What else do people do that they shouldn’t?
Pete Green: Another thing is auto loans, student loans or taking out any new loans such as buying a temporary smaller second home. Maybe before or in advance of their permanent second home. That can be a problem because then they have something to sell and a larger payment that really can be a barrier to them qualifying.
Kathy Sperl-Bell: I had a client actually do that before he retired. He co-signed auto loans for each of his three children.
Pete Green: Very sweet, but very problematic for the mortgage lender.
Kathy Sperl-Bell: Isn’t it true if a loan like that had matured for a couple of years, that might not be counted against them?
Pete Green: Yeah. In certain instances, as long as they’re both on the loan and we can prove that the co-signee, so the person who is using the vehicle or whatever it is, has paid the payment for 12 consistent months we can omit that from their bottom line.
Kathy Sperl-Bell: What about some of the do’s? In other words, if their planning to retire, let’s say we’re early 2018, in the summer of 2019, what are some good steps to take now?
Pete Green: Well the number one first thing is you can call your REALTOR®. Call Kathy. It really is the best way to start so you can get a feel for the area, and then the immediate second step is to call your lender. So give us a call so we can plan. In this situation, we sort of see ourselves more like estate planners or financial planners. Not that we are a licensed one, but we look ahead and see what they’re going to need to do to prepare themselves to obtain a mortgage in their retirement years.
Kathy Sperl-Bell: Sometimes it’s the best idea to do it now.
Pete Green: Yes, absolutely. I think the way I would categorize it is that the single best time to do it is right now. At least that way you know. You can set that plan in motion. Sometimes your answer when you start that is to literally move forward now because maybe you find out through the planning with your mortgage lender that you’re going to need your current income to qualify for that mortgage.
Pete Green: The second best time is I would say maybe six months to a year out, but I would still say that that’s a strong plan B. The very best way or time to start is when you first think of it.
Kathy Sperl-Bell: Right. That would be my advice also because trying to do everything at once in one fell swoop, “I’m going to retire, I’m going to sell my house, I’m going to relocate, I’m going to buy a house.” That’s really a whole lot to leave until the last minute.
Pete Green: Absolutely.
Kathy Sperl-Bell: There’s no such thing as too early to start planning and at least have that initial consultative conversation. The message, call us and we’re here to help.
Pete Green: Thank you so much, Kathy.
Kathy Sperl-Bell: Okay. Thanks for coming Pete.
Pete Green: My pleasure.
Do you have questions? We have answers! Whether you have questions about real estate, mortgages, relocating or retiring to Delaware, they can all be featured in our Ask The Broker series. You can submit your questions directly by visiting HERE or you can email Kathy at Broker@ActiveAdultsRealty.com.