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Old 12-02-2015, 09:55 AM   #1
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Getting a mortgage without a job?

Should I be concerned about buying an RV after I retire? I have good credit and a pension and money saved. All that being said if I put down between 25 and 50% on a 250000 motorhome is the bank going to laugh at me when I'm not employed or is this something I should be doing before I retire?
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Old 12-02-2015, 10:15 AM   #2
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I doubt that this will be a problem for you especially with a substantial down payment. but a couple of things to consider....

- consider paying cash for the toy. you may be able to wangle a better deal and save tons of $ on interest to boot.

- consider purchasing the toy before you retire. doesn't have to be years before...it can be months or even weeks before.

good luck and welcome to the 'everyday is Saturday breakfast club'!
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Old 12-02-2015, 10:45 AM   #3
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We haven't worked for more than 10 years, but have a pension, pay our bills on time etc. and our scores all about as high as they go.

DON'T WORRY!!!!!![COLOR="Red"][/COLOR]
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Old 12-02-2015, 12:40 PM   #4
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I'd consider purchasing while still working - even a few months prior to retirement.
We have been retired for 2 years, paid cash for our Motorhome and other stuff ( No debt ), own our RV property, have a good retirement income, etc. etc. Both credit ratings are excellent. Bank turned us down on a temporary 20k line of credit because we had " no steady income "
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Old 12-02-2015, 12:56 PM   #5
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Originally Posted by rk911 View Post
I doubt that this will be a problem for you especially with a substantial down payment. but a couple of things to consider....

- consider paying cash for the toy. you may be able to wangle a better deal and save tons of $ on interest to boot.

- consider purchasing the toy before you retire. doesn't have to be years before...it can be months or even weeks before.

good luck and welcome to the 'everyday is Saturday breakfast club'!
Actually a cash purchase may cost you MORE up front rather than less. Dealers get a rebate or kick-back, whatever you want to call it, for loans placed with particular finance companies. This rebate can be substantial. I have seen financial statements for auto dealers where they didn't make anything on the cars they sold, but their entire bottom line was finance rebates.
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Old 12-02-2015, 12:59 PM   #6
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Originally Posted by britcon View Post
I'd consider purchasing while still working - even a few months prior to retirement.
We have been retired for 2 years, paid cash for our Motorhome and other stuff ( No debt ), own our RV property, have a good retirement income, etc. etc. Both credit ratings are excellent. Bank turned us down on a temporary 20k line of credit because we had " no steady income "
You need a new bank. Nobody of any real intellect cares if you have a job. "Oh yes, Mr Gates, I see you retired from MicroSoft so we can't loan you any money because you don't have a job" said no one ever! And paying cash for toys is a good idea, but you gotta compare after tax opportunity costs. Sometimes borrowing money is cheaper than cashing out a high performing portfolio, but after tax is key. Interest paid on a second home, and most rvs are in fact second home for tax purposes, is deductible. (Check with your tax pro.)
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Old 12-02-2015, 01:21 PM   #7
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If you have a good current income, the process will be more streamlined. It's a bit more complicated after you are retired because you have to list all your sources of income and investment assets. Bank loan officers like to deal with simple applications in order to cover their tails.
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Old 12-02-2015, 01:23 PM   #8
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Actually a cash purchase may cost you MORE up front rather than less. Dealers get a rebate or kick-back, whatever you want to call it, for loans placed with particular finance companies. This rebate can be substantial. I have seen financial statements for auto dealers where they didn't make anything on the cars they sold, but their entire bottom line was finance rebates.
that may be true from a particular dealer which is why it pays to shop several dealers. as a buyer all I really care about is how much dinero is coming out of my pocket. besides, whatever amount the dealer is unwilling to discount for cash would certainly be made up in interest savings.

the OP seemed to indicate that the RV he's looking at has a price tag of $250,000 so lets go with that. assuming 50% down, a 20-yr loan and an interest rate of 5% total interest payments are nearly $73,000 or nearly $57K with a 4% interest rate. assuming the OP only puts down 25% he will pay just over $85K in interest (4%) or nearly $109,500 in interest (5%). higher interest rates only increase the savings. the savings by paying cash are enormous.
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Old 12-02-2015, 01:25 PM   #9
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Arguably, a pension is a MORE stable income than a job since you generally can't get laid off from your pension (yes, I know there are some exceptions, but they are relatively small, percentage wise)

Steve
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Old 12-02-2015, 02:34 PM   #10
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Been retired for 4 years. Opened up a home equity line of credit last year, $100,000 line of credit. Opened a new charge card last week, took a couple of minutes online, $13,900 credit limit. Opened another new credit card several months ago, also took only a few minutes online to be approved.

If you have income and assists it doesn't matter if you have a job. There may be reasons to buy now or buy later but don't worry about being retired.
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Old 12-02-2015, 02:38 PM   #11
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You need a new bank. Nobody of any real intellect cares if you have a job. "Oh yes, Mr Gates, I see you retired from MicroSoft so we can't loan you any money because you don't have a job" said no one ever! And paying cash for toys is a good idea, but you gotta compare after tax opportunity costs. Sometimes borrowing money is cheaper than cashing out a high performing portfolio, but after tax is key. Interest paid on a second home, and most rvs are in fact second home for tax purposes, is deductible. (Check with your tax pro.)

Of all the advice listed here, this is the most sound. Where are your investments and what will you pay in taxes on cashing those investments in? If you are already drawing Social Security, will the additional income make more of your Social Security taxable? How is the rate of return on your investments compared to the interest rate on your purchase?

The interest on a motorhome is deductible as second home mortgage interest. Pending legislation may also make the sales tax deductible this year but Congress hasn't passed that bill yet, and may not pass it all.

Make the best deal you can and see if financing it will help on the purchase price. You only have to have the loan outstanding for about six months for the dealer to get his rebate and that can be a leverage tool to help in the negotiations. Good luck and have fun shopping.
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Old 12-02-2015, 03:43 PM   #12
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Quote:
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You need a new bank. Nobody of any real intellect cares if you have a job. "Oh yes, Mr Gates, I see you retired from MicroSoft so we can't loan you any money because you don't have a job" said no one ever! And paying cash for toys is a good idea, but you gotta compare after tax opportunity costs. Sometimes borrowing money is cheaper than cashing out a high performing portfolio, but after tax is key. Interest paid on a second home, and most rvs are in fact second home for tax purposes, is deductible. (Check with your tax pro.)
correct on all counts but remember the tax deduction is not penny for penny.
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Old 12-02-2015, 03:48 PM   #13
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Arguably, a pension is a MORE stable income than a job since you generally can't get laid off from your pension (yes, I know there are some exceptions, but they are relatively small, percentage wise)

Steve
depends on the source of the pension. lots of private sector pensions are going/have gone belly up whereas govt pensions are more secure. more secure...not 100% secure. defined benefit pensions are fast becoming rarer than hen's teeth in favor of defined contribution plans. either is good but neither should be more than 35-40% of planned retirement income. personal investments and social security make up the other two income streams that, hopefully, provide the 70-80% of pre-retirement earnings many experts recommend.
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Old 12-02-2015, 05:25 PM   #14
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Lot of good thoughts here but I thought his question was would he have a problem getting a loan when he's retired. Everybody's financial situation is different. Tax deductions, income, investments are all considerations but that wasn't the question as I read it. Our house is almost paid off, we have to file short form because we don't have enough deductions and it's been that way for several years. Borrowing $125,000 for an RV wouldn't change that significantly. Maybe, just maybe I could go long form, but the tax savings wouldn't amount to much. That's my situation, not necessarily his or anyone else's.

He has to decide the financial implications of buying now vs later. He just wants to know if he'll have a problem getting a loan later.
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