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Early Retired at 60. Living off comfortable portfolio. Trying to downsize and buy new home. Banks wont even consider my portfolio for loan approval(although if I wanted I could pay cash.) They suggested rolling everything into annuity for "income" but paying someone to give me my own money is crap. Any thoughts of ways to utilize stock portfolio as income source while keeping investment flexibility. Someone suggested forming my own annuity to pay myself. (Bank will look at dividend stream but I only recently began shifting more assets toward this and it does not show substantially on tax filings yet)
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I assume your portfolio is in retirement accounts? If so, that is why it cannot be used as collateral.

If it is outside of retirement accounts, it can be collateralized. You just may need to find a new bank.

The other comment regarding income is true in my experience. If these assets are in a retirement account and you have not been using them as income, you may need to show a few months (or more) of income coming out of it before the bank will count it - which is why they likely suggested an annuity to reflect consistent income.

This is the part I don't get:

Living off comfortable portfolio.

If you are living off your portfolio, have you not already demonstrated income being pulled from such?
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Is this a tax deferred, tax free, or taxable account?
What do you plan to do with your existing home? If you are going to sell it, can you take a loan against the existing home temporarily?
For some reason lenders seem to care less about net worth and only consider income. This doesn't make sense to me, but, that seems to be the way it is.
When I got a home loan after retirement I had to arrange for IRA withdrawals such that they could see income to make mortgage payments. After the loan was made I changed the withdrawals to what I wanted.

Bob
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Hi RNGuy,

Early Retired at 60. Living off comfortable portfolio. Trying to downsize and buy new home. Banks wont even consider my portfolio for loan approval(although if I wanted I could pay cash.) They suggested rolling everything into annuity for "income" but paying someone to give me my own money is crap. Any thoughts of ways to utilize stock portfolio as income source while keeping investment flexibility.

You need a portfolio lender who offers 'assets-as-income' qualification terms. The lenders that offer these are those who typically do not sell off their closed loans to Fannie & Freddie.

Either call around the retail lenders asking for assets-for-income terms, or use a broker who's already got that in their program portfolio.

Helpful?
Dave Donhoff
Leverage Planner
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I wasn't clear....This isn't a retirement fund. Just my stock investments which I will be spending down some until SS and IRAs are available. Will be selling my current house and paying off that loan but that only reduces my outstanding debt. New loan must be based solely on wife's income which limits our choices. Frustrating, as you said that banks will not consider net worth and only look at income. I have great credit score (>805)but am treated like a loser.
We have a good banker who sees my dilemma but we are still stuck with not being able to take out a new loan until ALL other debts are paid off (cars, home, CCards) and contingency sales just aren't flying in this market. We have already lost offers on 2 homes while mine is on the market as well.
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Thanks Dave. You say "portfolio lender". I assume you mean a mortgage bank that will loan on assets-as-income. Am in Wyoming and it seems choices are limited but will ask around for this criteria.
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Find a new lender.

There is no rule that states your non-retirement investment assets cannot be considered as part of your loan application - in fact, the lender asks for that information as part oftheir application (Form 1003, I think).
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rnguy,

Since you are 60, you can use IRA money. It will be taxed as income (from a trad account).

Ask the banker specifically if paying the CCs and cars would turn the trick for you.

Gene
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Thanks Dave.
You're welcome, of course!

You say "portfolio lender". I assume you mean a mortgage bank that will loan on assets-as-income.
Correct. Specifically, a bank with mortgage programs that offer a calculation of assets that can be used to reduce your debt/income ratios (without requiring you to actually drawdown those assets for the purpose.)

Am in Wyoming and it seems choices are limited but will ask around for this criteria.
Again, you might get more traction by searching for a good mortgage broker, rather than directly shopping lenders. The experienced brokers generally have their finger on the pulse of the market of available wholesale niche lenders, and the the net/net final cost to you is generally competitive (if not less) than what you'd pay through a retail lending outlet.

Dave Donhoff
Leverage Planner
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