Getting A Mortgage When You Retire

Written by Jeremy Biberdorf

If you are nearing your retirement, and want to re-locate, you may be wondering how you can manage the move financially. You may assume that because you do not have a regular paycheck coming in, you will not be able to get a mortgage to help you purchase a property.

However, it is possible to get a mortgage even after you have retired. You can check the best calculator to estimate your mortgage payment in Texas. However, it’s important that you pay attention to certain factors that are relevant to a mortgage after retirement. These factors help to determine whether or not you can obtain a mortgage. It’s certainly worth taking a look at these factors as although it may be harder to borrow money after retirement, it’s definitely not impossible.

Using the drawdown from retirement method to calculate income

Calculating available income is an important aspect of determining a mortgage application. One of the most common means of determining income for retirees is the drawdown from retirement method. In the case of anyone who is at least 59 ½, it’s possible to use withdrawals from a retirement account as a means of determining income. Withdrawals for at least the last two months are taken into account.

Using the asset depletion method to calculate income

Another method that is used to determine income, when a retired person applies for a mortgage, is asset depletion. This involves the calculation of a person’s financial assets after which the cost of down payment and closing costs are subtracted. 70% of the resulting figure is then divided by 360, to determine a monthly figure.

Why does the debt to income ratio matter?

It’s not just income that is important in determining whether a retiree can acquire a mortgage. The debt to income ratio means that no more than 43% of a person’s income can go towards servicing a debt. It’s important to be aware that this includes any debt for which a person co-signs, such as the mortgage of an adult child.

What other factors may be important?

There are other factors that are also taken into account, when making a decision on a mortgage application from someone who is retired. The housing expense ratio means that payments made for a mortgage, mortgage interest, taxes and insurance cannot be more than 36% of available income.

Even if this ratio, and other factors, are satisfied a poor credit score can still make it difficult for a mortgage to be awarded. Ideally, a credit score of 780 should be attained, in order to stand the best chance of success.

You can see that it’s not easy to acquire a mortgage, if you are looking to move home after retirement. However, it is possible to succeed with a mortgage application, depending on the situation with your income, expenditure and credit rating. Not having a regular paycheck does not necessarily mean you will not be successful, you may still be able to get help.

Ingredients of a Happy Retirement

The retirement we ultimately decide to live is personal. Within the parameters of our individual financial situation and current health status, how we choose to live is up to us. We manage our days. We fill the calendar. We are in control.

Retirement affords the unique opportunity to become the person you want rather than the person you are supposed to be. The trick is to figure out who that is as soon as possible. As Zane Grey said, “we’re burning daylight.”

Everyone has advice to give. Friends generously share specifics of their retired life, perhaps bragging a bit, maybe complaining a tad. Books enumerate the good and bad pointing out pitfalls and pinnacles you are likely to encounter. Retirement bloggers share their journey as they learn to navigate their individual retirement jungle. Each source sheds some light on what it means to live retired 24 hours a day seven days a week. Yet none of these sample cases is necessarily how YOU will live your retirement. Your path to retirement is yours to blaze.

When it comes to the manufacturing the perfect retirement I don’t believe there is a generic one-size-fits-all recipe. We are different people. Our interests are all over the map. What excites you may bore the pants off me and visa versa. Each of us is responsible to find our respective way. How we get there is not always easy to predict. Plan on taking some missteps along the way but keep going.

And who wants a “perfect retirement” anyway? Perfect anything requires an attention to detail that has no place in the free flying life we can experience as retirees. It sounds like unnecessary stress if you ask me. I prefer to view retirement as a work-in-progress, a continually changing experience where we weed out what we don’t enjoy and add in what we love. What works one day may not another – that’s perfectly fine. It should be about making the most of each day. And the awesome reality of retirement is you get to decide exactly what that “most” consists of.

Retirement is an evolution. The person we are five years down the line is not the same person we were at the beginning. We learn, adapt, try a little of this, experiment with a little of that, and slowly learn how to make the most of our second act. That intensity and drive that was part of the working me has morphed into a more mellow go-with-the-flow retired me. I think my wife appreciates the change. I know my heart doctor does!

I write this blog from a little two-seater rocking chair, looking out my front door at my recently pruned roses whose healthy shiny leaves are beginning to return for a new season. A wind chime softly tones while a single bird twitters in the tree perhaps chiding the barking dog down the way. After weeks of rain – a rare occurrence in the Valley – the sun is out, the temperature is warm, and the sky is blue. Does it get any better?

Earlier today my wife and I went to Trader Joes – we love that place. We wander the isles finding intriguing new offerings along with our basics like fruit, veggies, bread, nuts, etc. My latest discovery is the Herb Popcorn – talk about addicting. From there I drove a few miles down the road to take a 90 minute walk along the shoreline. The California coast is definitely my sweet spot. Combine one part majestic coastlines strewn with craggy rocks, add a dose of booming waves breaking mercilessly on said rocks, throw in a pinch of riotously blooming cacti, and last but not least include the possibility of spotting a breeching whale lingering on horizon – that is my recipe for inspiration. When at the ocean it feels life just makes sense. One of my favorite quotes: ”the voice of the sea speaks to the soul.”

I think living a happy retirement comes down to figuring out what you most enjoy and then doing it. Sure there are days when you don’t feel 100 percent – that is part of the program. But when you do feel good make the most of it. Don’t worry about what you used to be able to do – do what you can. Be forever curious – the world is amazing in so many unique ways. Take a chance and venture outside your comfort zone. Remember you are not obligated to do anything. If a new direction turns out not to be what you expected, abandon ship! Move on to the next adventure, the next hobby, the next challenge, and the next reason for living.

Living a happy retirement life is something we all hope to experience. Good luck on your journey.

Choosing The Right Car In Retirement

Written by Sally Perkins

Today’s retired Americans – ‘Baby Boomers’ – own 70% of the country’s disposable income, making them the most likely to be able to spend out on expensive holidays or valuable assets. One asset retirees may want to invest in is a car. This may be particularly relevant to those who want to make the most of various road trips. Or it might just be that certain retired people want to update their car as a way of celebrating such a significant milestone. Whatever the reason, it is important to weigh up a number of key considerations before deciding what type of vehicle to go for. 

Consider the purpose of your motor

The most suitable car for you will depend on the size and style of vehicle you need. This, in turn, will depend on what you will be using the car for the majority of the time. If, for example, you are likely to be using your car most days, or have family you’ll often be giving lifts to, you may find a larger automobile the most appropriate. With 80-97% of American vehicles projected to be SUVs or trucks by 2022, this would be a popular choice. On the other hand, if you are only likely to be using your car occasionally, or for short journeys, a smaller car that is probably cheaper to run may be the best option for you. It is also worth considering how long you want the car to last. Are you, for instance, looking for something that will last for a considerable number of years, or are you likely to want to update the car again in a few years’ time? These factors will influence how much you should be looking to spend and whether you should for a used car or something new.

Don’t forget about maintenance costs

It goes without saying that the upfront cost of a car is just the beginning; the maintenance of the car is where the real costs start to quickly add up. This can be particularly true in the case of used cars, when the risk of problems arising is higher than with new cars. Drivers will often be covered by a three year warranty when buying a new car; used cars don’t come with this benefit, making them more of a risk in that sense. With maintenance costs for new cars (including tire changes) hitting an average of $99 per year, it is imperative you get an up-to-date history of any car you are interested in buying. Whether you opt for a new or used car, large or small, be sure to research thoroughly any aspects that are known to be problematic and pricey to maintain. This can help you gain clarity and lessen the chance of you having unexpected costs early on.

Prioritize the safety features of a car

Of prime importance when it comes to purchasing a car is safety. Strict safety regulations for new cars, along with the focus on safety features in the design of modern cars, mean that new cars are likely to be a safer option than older models. The emergence of features such as Automatic Emergency Braking (AEB), Blind Spot Detection and lane assist helps keep drivers and pedestrians safer on the roads, whilst also helping to keep you more relaxed and confident behind the wheel. This might be particularly appealing for older drivers who tire more easily, particularly when it comes to lane assist, which recognizes when the car is veering out of a lane and immediately guides the steering wheel back into the correct lane.

Consider leasing a car

One option to consider when it comes to updating your car is to lease one, rather than buying it. This is increasingly popular among drivers, with over 30% of new cars leased in America in the second quarter of 2018. Leasing involves paying a monthly cost for a car and offers you the benefit of driving a brand new car for a given number of years. Whilst you wouldn’t actually own the car, leasing has the advantage of providing you with a reliable vehicle under a manufacturer’s guarantee at a cost far lower than the depreciation of the vehicle. The downside of leasing is that you do not end up owning the car and you must have the car for a fixed term. It is also extremely costly to end the contract early.  

The takeaway: take your time to decide

If you are retiring and fancy treating yourself to a car, then you no doubt deserve it. However, purchasing a car is an important decision that obviously involves parting with a lot of money. For this reason, be sure to think carefully about your circumstances and the types of vehicles that will best accommodate your needs. Safety and affordability are key, so make sure you do your homework on the sums involved and the safety record of any model you are interested in. Think carefully about whether to buy a new or used car, or whether to lease. Finally, test drive any car you are considering, preferably at different times of day and with at least one passenger on board. This will give you a sense of what driving the car is like in different conditions, whilst also enabling you to receive honest feedback from others on their experience in the car.