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Personal Finances / Buying or Selling a Home


Subject:  Re: Mortgage Date:  9/29/2019  10:26 PM
Author:  aj485 Number:  129264 of 129284

We did not have to draw down anything. Our retirement assets remain untapped. No charades in the asset based mortgage that we got. For a previous effort to buy a property it was suggested that we do the two months draw down of retirement assets as you suggest. This was a different type of mortgage.

Yes, you apparently got an asset based mortgage. If you are not drawing down on your assets, you can get an asset based mortgage based on income that those assets *could* generate.

However, if you are drawing down on your assets, then you can't use those assets for an asset based mortgage - you will need to document the income you are actually drawing from them. If you are drawing from part of your assets (for instance, one spouse's IRA), then you can use the income you are drawing from those assets, and get a partially asset based mortgage based on the income that the rest of the assets (which you aren't drawing from) *could* generate.

Please note: An asset based mortgage assumes that the assets could generate about 2.33% of the assets per year in income: 0.7/360 * 12 = 0.02333 So, if you are planning on using a 4% rule, you're going to be pulling more than that from the assets.

We also had to put a minimum of 30% down, not a penny less.

Yes - asset based mortgages are generally more expensive than income based mortgages, either in rate, in down payment requirement, or sometimes in both. Since investment properties were also mentioned - Mortgages for investment properties are also generally more expensive than mortgages for your principal residence, again in rate, in down payment requirement, or both. And, you generally can't get asset based mortgages for investment properties. DrTarr's company apparently does asset based lending for investment properties, but lenders who sell all of their mortgages to Fannie Mae and/or Freddie Mac don't, since Fannie and Freddie don't allow using asset based mortgages for investment properties.

Documented income was no where close to qualifying us for the loan, but no withdrawals from retirement accounts needed. Just large balances.

Right - because you got an asset based mortgage. You only need to document income if you are getting an income based mortgage.

Probably another type of mortgage out there that's not quite what you are talking about.

Actually asset based mortgages (aka asset depletion mortgages) were extensively discussed in this thread, but the discussion switched back and forth several times based on questions and comments by other posters.

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