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Old 01-26-2013, 06:11 AM   #1
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Financing at Retiring??

We are in the process of selling our fifth wheel trailer and truck to buy a motorhome. I am retired and of course on a fixed income. I also have monthly deposits off of my separate 401k plans.

Will I be able to get financing for the motorhome? I plan on putting about 30% down. Surely our past high credit ratings and past history has something to do with this.
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Old 01-26-2013, 06:17 AM   #2
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If you have a good credit score you should not have a problem. Safe travels and enjoy your new coach when you get it.
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Old 01-26-2013, 06:24 AM   #3
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Thanks for the quick response. I just had a thought this morning of what if we could not get financing. We would have already sold the fiver and truck. My wife would kill me if we was unable to take our trips.

Another plus for us is we would be debt free at the time of applying for the financing. We are now except for the fiver. I plan on paying it off early prior to selling it and putting that money back into our separate savings account.
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Old 01-26-2013, 06:25 AM   #4
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I suspect if you have a good relationship with your bank or C/U you shouldn't have a problem. Of course that's all in relation to your income, what other assets you may have and the cost of the new coach. Good luck and hopefully it will all work out.
I think I would most definately check with your bank and discuss it before maybe you sell the 5er just in case. Don't want to be caught short handed.
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Old 01-26-2013, 06:29 AM   #5
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Originally Posted by reubenray View Post
Thanks for the quick response. I just had a thought this morning of what if we could not get financing. We would have already sold the fiver and truck. My wife would kill me if we was unable to take our trips.
If you use it for trade in,even though you won't get as good a deal,you won't have to worry.
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Old 01-26-2013, 06:30 AM   #6
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Being Good Sam has the best rates I was thinking about checking to see if they pre-approve RV loans.
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Old 01-26-2013, 06:31 AM   #7
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If you use it for trade in,even though you won't get as good a deal,you won't have to worry.
I am hoping to sell it outright and the trade-in option would be the last option. I will be listing it after we take our next trip. We have bought a sign and will put it in the back glass now.
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Old 01-26-2013, 08:03 AM   #8
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I would seriously reconsider financing a declining asset with a fixed retirement income. Not my cup of tea.

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Old 01-26-2013, 08:24 AM   #9
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Originally Posted by Steve N Sal View Post
I suspect if you have a good relationship with your bank or C/U you shouldn't have a problem. Of course that's all in relation to your income, what other assets you may have and the cost of the new coach. Good luck and hopefully it will all work out.
I think I would most definately check with your bank and discuss it before maybe you sell the 5er just in case. Don't want to be caught short handed.
Not necessarly true

Retired bought a motor home, then bought a smaller retirement home. To our credit union of 42 years draws against my investment was not income and they would not lend me the full amount I wanted on the home.

Key word for us retired is income
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Old 01-26-2013, 08:46 AM   #10
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In a previous life I did RV and boat financing and we wrote plenty of loans to retirees. Things arent as fast an loose as they were back then but as long as you have the assets/income to back up the monthly debt service in relation to your overall financial health it should be fine. They will certainly ask for a personal balance sheet so you may want to prepare one.
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Old 01-26-2013, 12:11 PM   #11
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Surely our past high credit ratings and past history has something to do with this.
Nope! In the world of finances - especially after the GFC brought about by intemperate lending policies - it is your capacity to repay under your present and anticipated future financial circumstances that is relevant. Once you have retired, what you did before that point to gain your credit-worthiness is no longer very relevant.
If however, you have significant equity in other areas, then they would count because the lender can use them for security and again, your creditworthiness isn't an issue. Only you can decide whether it is worth risking what you already have for what you want.
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Old 01-26-2013, 01:26 PM   #12
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Since we retired in 1995, we've bought automobiles, RVs, and houses and were able to get financing for each.

You cannot be turned down for a loan simply because you are retired.
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Old 01-26-2013, 05:19 PM   #13
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we've dealt with this twice in the past 2 years - retired in 2008 being too young for Social Security and not wanting to tap into the 401(k) unless absolutely necessary. First we wanted to refinance our motorhome to reduce the monthly payments - went to the lender with our credit scores of 859 and 862, a home that is paid off, and over $100K in ready cash in savings accounts. The on-line application was immediately rejected, as I expected, because our reported income was $0 - we were living off our savings, and doing quite well. After talking to a loan officer in person we were able to complete the refi by paying down the existing loan to bring the refi amount down by $30K - our monthly payment was cut in half, and the interest rate was dropped by 2 points.

That brings us to this year - my wife's parents passed away and left their house to my wife and her sister. Our goal was to basically buy out her sister's share of the house so we would own it outright. The lenders all wanted to see income that would give us a debt ratio of at least 45% - they didn't care what the income was, they wanted to see numbers. So, we set up a monthly distribution from my 401(k) of an amount that would give us the required debt ratio, and provided documentation that the source of that income was sufficient to cover 2 year's worth of payments.

The bottom line - most lenders need to see a debt ratio that they feel is safe - usually in the 45% range. That means you need income of SOME kind - whether it's SS, annuities, 401(k), or other income. Because of the issues in the financial industry over the past 5 years very few lenders are willing to look at only assets as a basis for lending anymore.
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Old 01-26-2013, 05:35 PM   #14
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That brings us to this year - my wife's parents passed away and left their house to my wife and her sister. Our goal was to basically buy out her sister's share of the house so we would own it outright. The lenders all wanted to see income that would give us a debt ratio of at least 45% - they didn't care what the income was, they wanted to see numbers. So, we set up a monthly distribution from my 401(k) of an amount that would give us the required debt ratio, and provided documentation that the source of that income was sufficient to cover 2 year's worth of payments.
Did you stop the distribution as soon as the loan closed?
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