If you ever purchased a home while you were a working employee, you probably remember providing pay stubs and your W-2 form to verify your income.But if you are currently retired and thinking about purchasing a home, you may no longer have employer income.
That does not mean lenders are not interested in your income when you apply for a home loan as a retiree. It just means you will need to account for different types of income and document them in other ways.
Income and Assets to Document When Applying for a Mortgage While Retired
The exact types of income you will need to document will depend on your individual financial situation. They could include any of the following:
- Social Security
- Regular retirement distributions
- Spousal benefits/survivor benefits
Every form of income you have during retirement is classified as either having or not having an expiration date.For example, Social Security payments do not expire. They last for as long as you are alive. Distributions from retirement accounts, on the other hand, can expire. However you can count an automatic monthly retirement distribution as income as long as it can continue for three years and not deplete your account balance. If you still expect to be receiving payments three years after you apply for a home loan from an income source with an expiration date, then you can use it.
For some assets, there are additional rules as well. For instance, if there are penalties for early withdrawal on your retirement accounts, that can prohibit you from using those accounts as income for mortgage purposes. You also may only be able to use a certain percent of their value.
Blue Square Mortgage Can Walk You Through the Mortgage Process
You can see that there is a great deal more complexity in calculating and documenting your income when you are applying for a mortgage during retirement than there is when you are still working. Nevertheless, it does not need to be difficult when you have the loan experts at Blue Square Mortgage on your side. Our team is experienced with helping retired homebuyers successfully apply for mortgages in Seattle, and throughout the states of Washington. If you are ready to get answers to your questions about home purchase during retirement or apply for a mortgage now, please give us a call today at (206) 352-6453. We look forward to helping you buy a home with a competitive loan.