“An Important Update You Should Be Aware Of”

Good morning! Today, we’ve got a guest post from William Cowie, an expert in investing and finance. William shares his insights on Bite the Bullet Investing and Drop Dead Money, where he helps people overcome their fear of investing and understand the benefits of the economy. You can also follow him on Twitter or Facebook.

Imagine this: you’ve finally achieved your retirement goal at the age you wanted. One of your first moves is to sell your home and find the perfect place to enjoy your golden years. But hold on! Before you get too excited, there’s a significant financial change you need to be aware of.

Remember the housing boom of the mid to late 2000s? Back then, getting a mortgage was as easy as winking at the loan officer, but that led to a disastrous crash. In response to that fiasco, Congress introduced new regulations to protect consumers.

You’d think Congress is there to protect us, right? But in reality, powerful banking lobbyists have a huge influence. Take the example of Charles Keating and the Lincoln Savings and Loan scandal from the 1980s. Keating’s unethical practices and his bribing of five senior senators, known as the Keating Five, allowed his predatory actions to go unchecked until taxpayers had to foot the bill for the losses.

Today, the influence of lobbyists is even more pervasive, affecting our personal finances. One major change is the strict income verification required when applying for a home loan. Unlike before, where a simple wink could smooth over income discrepancies, now you need exhaustive proof of income.

Let’s say you retire with a sizable investment portfolio and want a modest home loan. Even with a hefty down payment, you could be denied if you can’t prove several years of consistent dividend income. This makes it incredibly difficult for retirees to get a mortgage.

The new stringent loan qualifications are less about protecting consumers and more about banks safeguarding themselves from competition. It’s like sports leagues capping player salaries to prevent owners from overspending.

So, what can you do?

1. Be Aware: If you’re planning to retire, understand the strict new income verification rules to avoid any surprises.
2. Get Out of Debt: If you can buy your retirement home with cash, do it. This is the best motivation to pay off your mortgage.
3. Buy Before You Retire: Mortgages are easier to secure while you’re still employed. Consider purchasing your retirement home before you leave the workforce.

In conclusion, the simplest way to navigate this issue is to get out of debt, though it’s no easy feat. What’s your plan for achieving financial independence?