Educational Example 01
The Retiree With Savings but a Small Paper Income
- The situation
- A recently retired Metro Atlanta homeowner has healthy retirement and savings accounts, strong equity, and a monthly income that now looks small on paper. The house needs work, and a traditional refinance application stalls on the income question.
- Why asset depletion may be considered
- Past eligible retirement age, retirement accounts can count in full under one active program, and at no less than 70 percent of vested value under others, so decades of saving can become qualifying income without going back to work.
- What still needs review
- Whether the income the assets create carries the new payment comfortably within the debt to income cap, the reserve requirement, and whether the cash need justifies the costs and the equity given up.
- When another path might fit better
- If the cash need is modest, a home equity option that leaves the first mortgage untouched may cost less, and if the accounts can fund the project directly, borrowing may not be needed at all.
