Retirement assets to be considered in qualifying for conventional loans under new Fannie Mae & Freddie Mac policies. Should add flexibility for retired individuals wanting a conventional loan.
One of the unfortunate outcomes of the economic crisis since 2008 has been perfectly well-qualified borrowers that cannot get a loan under the very strict underwriting guidelines we have all been living with the past five years. Finally, policy changes at Fannie Mae and Freddie Mac may help those with substantial retirement assets qualify for low rate conventional loans by including in income eligibility factors such as IRA, 401(k) and other retirement assets, to supplement existing fixed income such as Social Security. I can think of a number of clients over the past five years that have been frustrated at their inability to qualify for a mortgage when they had hundreds of thousands, and sometimes over a million, dollars in their retirement funds. While Fannie Mae and Freddie Mac can come out with new underwriting guidelines, it will be important to get investors on board to accept these new policies and provide the dollars necessary to fund these loans. The early success of the HARP refinance program for borrowers with less than 20% equity in their homes was torpedoed by a lack of investor appetite for these riskier loans. I would not anticipate the same kinds of issues with this new program, however. This is an exciting change that would return some flexibility to those making a transition in retirement to a new home. If you would like to talk with a mortgage advisor who thinks long-term and strategically about your financial investments including your liabilities – please give me a call.