If retiring and need a home loan, get loan first

debt and plenty of savings, financial planners say.

The issue is often proving that you have enough steady income to repay the loan, said Lori Trawinski, director of finance and employment for AARP Public Policy Institute.

Working people can use W-2 forms and pay stubs to prove they have sufficient income . Lenders can verify incomes through IRS transcripts, by calling an employer or using massive paycheck databases such as The Work Number. Lenders typically want to see two years’ worth of steady income, but working borrowers aren’t required to prove that their incomes will continue at the same rate.

The rules are more complicated for retirees, Trawinski said. In addition to proving they have enough income to pay the loan, retired people often must prove that the money will continue for at least three years, she said. value. Lenders may divide the result by the number of expected payments, such as 360 in the case of a 30-year loan.

Retirement accounts usually won’t be included in these calculations unless the balances can be accessed without restriction. Since the Barkeys were under 59 ½ — the earliest age their retirement accounts could be tapped without penalty — lenders typically would ignore the $3 million in those accounts. Kayla Johnson of Wilmington, N.C., said helping clients in retirement get mortgages and HELOCs often “takes a lot of financial gymnastics.” She recommends people apply for home loans while they’re still working, if possible.

“It’s simplest to secure any loan you may need before retirement,” Johnson said.

People who need home loans and are already retired should consider talking to a loan officer about their situations before submitting an application and risking damage to their credit scores, financial planners say. Such a conversation can help potential applicants get a better feel for how the lender will view their application and how many hurdles lie ahead. Not all lenders are equally skilled at dealing with retired clients, so you may need to talk to more than one lender to find the right fit.

And if you’re turned down, don’t consider that the last word.

After being rejected by the credit union, Kelly Barkey contacted its president by Facebook Messenger to ask why. She said soon afterward, they got a call from the loan department manager admitting the credit union had “overlooked some things.”

“And within a day, we had our HELOC,” Kelly Barkey said.