When to apply/qualify for a mortgage for a retirement home?

I expect to retire within a year and relocate across the country (my retirement date is flexible, and I will probably stop working when I have a contract for sale of my home, after I list it, possibly this coming summer). I own a home (in Virginia) and expect to buy a home in an active adult community in Washington state. If I sign a contract for a new home to be built, I believe the construction time will be at least six months. Should I apply for financing through the builder, when they recommend that, or apply on my own to a credit union I would join in Washington? [I currently have a mortgage with a local credit union.] Is it better to apply for a new mortgage while I am still working and own a home (which I will sell), or wait until my income will come mostly from a qualified retirement plan after I sell and stop working (when I will have money for a substantial down payment)? I can afford to carry two mortgages, if necessary, but should I sell my current house first, then sign a contract for a retirement home and plan to rent for a number of months where I am moving, or sign a contract, list my house and run the risk of a few months with double mortgage payments–if that will not be a problem for the lender? I have looked for guidance on what should be a fairly common issue for many new retirees, but have not seen more than general guidance to sell the first home (if not in a hot market) and then rent/buy. I live in a fairly hot market to sell, but what do you recommend to make the transition for people who relocate to retire, both economical and less stressful?

Terry Says:  OK, there are several issues at work here concerning the mortgage.  First, you should apply for a mortgage while you are still working.  It is very difficult these days to get a mortgage after you have retired, even with a substantial down payment, based only on retirement income.  BUT, you will run into a problem because the house you want to buy is not built yet.  And you can’t get a traditional mortgage without a certificate of occupancy.  You should check with the builder to see if they will guarantee a mortgage and  the RATE, if you give them a down payment.  And, of course, you want to deal with a reputable organization. Otherwise, you could get caught in the switches.

This is tough, because you can’t have it both ways — I’m wondering if you only have one home whether you can pay in cash and just not have a mortgage.  If that’s not possible, then you should talk to a lender in the new area and get a written commitment on an already existing property with a small down payment.  Then when you sell your house, you can prepay all or part of this mortgage.   Otherwise you are taking a chance on not have enough qualified income to get a mortgage on your retirement property.  You’re smart to be figuring this out in advance!