Here's another idea on how to fix the market with little added risk to lenders and investors:
Some investors won't allow qualified buyers of retirement age to use their nest egg to qualify for a home loan.
Today, I'm talking with a gentleman with outstanding credit, fantastic liquid assets (cash), limited debt, and a lifetime of consevative financial management. He has a nice pension that won't quite qualify him for what he wants to buy. Fannie Mae will only allow him to use as income what he's been drawing from his IRA for income to qualify. He's been taking a minimal amount because he's conservative.
He can take enough to match what his pension is, and with no interest the funds would last over twenty years not counting any interest. Wouldn't you think he could designate the amount he's going to get, make an adjustment to his withdrawal schedule and provide the lender a copy and qualify? No, we have to wait for a three month history.
The justification by the investor? "He could blow the money".....Really? Someone with his track record and history is clearly responsible with money. He should get the loan.
So, to fix the market? Make it easier to use retirement funds to qualify.
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