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Can I use my 401K for 100% of my down payment and closing costs?
For you mortgage brokers here, my stats as follows:
Credit score: 720 (prior to paying several thousand is debt down- should be a bit higher now)
Income: 79k (INCLUDING bonus- fully documented)
Current debt: $483 (total monthly recurring payments- including estimated 401K loan payment amount). Will come down slightly soon as I will pay-off another a card soon.
Taxes: I’m currently looking at a 1-2 bedroom on the cheap somewhere depending on my daughters grades. I’m estimating between $500-600 in maintenance
I’m looking to pull out about 15K from my 401K for a down payment (coop- sponsor sale, no board, no minimum down payment) and then a hardship withdrawal from my 401K for closing costs.
Sure you could - the only restriction I can see would be the terms that the 401K plan would impose on you to pull out the money.
Have you looked into low- to no-downpayment programs, like a My Community, FHA or Rural Development to help preserve your 401k assets? If you put the money down that you're considering, what will be your loan-to-value?
Sure you could - the only restriction I can see would be the terms that the 401K plan would impose on you to pull out the money.
Have you looked into low- to no-downpayment programs, like a My Community, FHA or Rural Development to help preserve your 401k assets? If you put the money down that you're considering, what will be your loan-to-value?
yep, looked at the 401K restrictions. I can take out 50% with payment up to 15 years (as long as it is for purchase of a primary residence. but they want to see a contract of sale or a mortgage commitment first which is reasonalbe) The hardship withdrawal also has some guidelines which i have also factored in.
I'll looking putting a 10% downpayment as I am a bit paranoid of going in with zero equity. Is that a mistake if i easily qualify for a lower downpayment?
I just didnt know if lenders will allow me to totally depend on 401K funds to do this. I have about 25 years left before hitting retirement age so i will have a little more time to reinforce my retirement plans.
Last edited by BK2Westchester; 12-24-2007 at 05:14 PM..
Can I use my 401K for 100% of my down payment and closing costs? You can only use 70% of the vested balance or amount able to be used minus any loans. If you're only allowed to use 50% of your 401k...then you would need to multiply by 70% and minus out the loan
For you mortgage brokers here, my stats as follows:
Credit score: 720 (prior to paying several thousand is debt down- should be a bit higher now) Generally, if you have a 720 or a 850 you will still get the same rate.
Income: 79k (INCLUDING bonus- fully documented)Bonuses are generally averaged for the last 2yrs. If you received it for only 1yr...most lenders will not count it towards your income
Current debt: $483 (total monthly recurring payments- including estimated 401K loan payment amount). Will come down slightly soon as I will pay-off another a card soon.
Taxes: I’m currently looking at a 1-2 bedroom on the cheap somewhere depending on my daughters grades. I’m estimating between $500-600 in maintenance
I’m looking to pull out about 15K from my 401K for a down payment (coop- sponsor sale, no board, no minimum down payment) and then a hardship withdrawal from my 401K for closing costs. 401k might let you pull out money w/out fees if it's for a home.
Is this doable?
We're missing the purchase price...loan amount.
A lot of ppl put 5-10% down..and lost it when the market corrected itself. Cash is hard to come by......if your value goes down..you wont be able to refinance to take out emergency funds.
FHA allows you to have a 400 score..and still get 6.5% or lower on a 30yr fixed with only 2.25% as a down payment.
Can I use my 401K for 100% of my down payment and closing costs?
For you mortgage brokers here, my stats as follows:
Credit score: 720 (prior to paying several thousand is debt down- should be a bit higher now)
Income: 79k (INCLUDING bonus- fully documented)
Current debt: $483 (total monthly recurring payments- including estimated 401K loan payment amount). Will come down slightly soon as I will pay-off another a card soon.
Taxes: I’m currently looking at a 1-2 bedroom on the cheap somewhere depending on my daughters grades. I’m estimating between $500-600 in maintenance
I’m looking to pull out about 15K from my 401K for a down payment (coop- sponsor sale, no board, no minimum down payment) and then a hardship withdrawal from my 401K for closing costs.
Is this doable?
Yes, you can always use a secured loan for down payment and/or closing costs. They will count the payment on this loan against your debt to income, but it sounds like that is probably not an issue.
No real need to be paranoid about going low to no down as you can always tap the 401k in the future if you run into trouble (as opposed to tapping now).
Compare the deal you can get with low or no down to a down payment.
Personally I would pull 10% down out of the 401k and close with an 80-10-10 (90% TLTV with 100% HTLTV). This means the 2nd mortgage is actually a HELOC set up to max out at 20% with you drawing only 10% the day of closing. After closing you can draw the other 10% on the HELOC and pay your 401k right back. This will allow you to get the best deal on a "$0" down loan. You should be able to find the HELOC with a convertable feature where after closing you can convert the balance to a fixed rate term loan if you so desire.
OR, if you qualify for a 1st time homebuyer bond program you could just go $0 down (100% My Comm. Mortgage loan) and get the best deal going.
A lot of ppl put 5-10% down..and lost it when the market corrected itself. Cash is hard to come by......if your value goes down..you wont be able to refinance to take out emergency funds.
FHA allows you to have a 400 score..and still get 6.5% or lower on a 30yr fixed with only 2.25% as a down payment.
I was looking at a condo/coop in the range of $178,000 in Edison, NJ with 10% down. Depends on the maintance/taxes for the unit and my income to debt ratio once that factored in.
I am a first time buyer so maybe I'll qualify for an FHA loan. I heard there are alot more rules with those loans. Is this true?
Regarding bonuses: This year i received 25K in bonuses. Last year 15K. The year before about 15K. Been going on like this 5 years now. This year was just a better year. How is the bonus income calculated when it varies?
Last edited by BK2Westchester; 12-26-2007 at 10:58 AM..
Personally I would pull 10% down out of the 401k and close with an 80-10-10 (90% TLTV with 100% HTLTV). This means the 2nd mortgage is actually a HELOC set up to max out at 20% with you drawing only 10% the day of closing. After closing you can draw the other 10% on the HELOC and pay your 401k right back. This will allow you to get the best deal on a "$0" down loan. You should be able to find the HELOC with a convertable feature where after closing you can convert the balance to a fixed rate term loan if you so desire.
OR, if you qualify for a 1st time homebuyer bond program you could just go $0 down (100% My Comm. Mortgage loan) and get the best deal going.
I calculated the monthly payback amount (proposed 401k loan) into my income to debt ratio mentioned in my original post.
I need to do some research into these 80-10-10's. Is the purpose of this strickly to avoid paying PMI or will it also grab a better interest rate? Also, would paying a "Heloc" loan be less then just paying the PMI insurance?
I would stay away from COOPs if possible....especially if they have strict rules. You'll see what I mean when you look into it further.
FHA loans are for 1, 2, 3, 4, 5th time, etc homebuyers...you can use it your whole life....even on refinances.
They require 2.25% down only....so you can decide if you would like to keep the rest...or put it in the home. I wouldnt put it in the home with the declining markets.
FHA loans are harder/easier.
Depends on the borrower. They can be used by someone who just received their social security card today...and can show 3 nontraditional tradelines (rent, electric, phone, etc).
If you have had any lates in the last 12months they may decline you.
They also have lower DTI guidelines which maybe a con for someone, and have loan limits. (200k for most areas....for large areas it's around 362k)
Quote:
Originally Posted by BK2Westchester
I was looking at a condo/coop in the range of $178,000 in Edison, NJ with 10% down. Depends on the maintance/taxes for the unit and my income to debt ratio once that factored in.
I am a first time buyer so maybe I'll qualify for an FHA loan. I've just heard there are alot more rules with those loans. Is this true?
Regarding bonuses: This year i received 25K in bonuses. Last year 15K. The year before about 15K. Been going on like this 5 years now. This year was just a better year. How is the bonus income calculated when it varies?
80-10-10......You may receive a regular 2nd loan...and may not be a HELOC. If it's a regular loan then you may receive a lower rate.
You can also look at 1 loan...in which the lender pays the PMI for you.
It's called LPMI (lender paid PMI)
It's to avoid the PMI....to structure the loan this way.
The rates will probably be 'slightly' higher on the first loan (if you take out the 2nd)
Most lenders require a 680credit score for LPMI products
Quote:
Originally Posted by BK2Westchester
I calculated the monthly payback amount into my income to debt ratio mentioned in my original post.
I need to do some research into these 80-10-10's. Is the purpose of this strickly to avoid paying PMI or will it also grab a better interest rate? Also, would paying a "Heloc" loan be less then just paying the PMI insurance?
80-10-10......You may receive a regular 2nd loan...and may not be a HELOC. If it's a regular loan then you may receive a lower rate.
You can also look at 1 loan...in which the lender pays the PMI for you.
It's called LPMI (lender paid PMI)
It's to avoid the PMI....to structure the loan this way.
The rates will probably be 'slightly' higher on the first loan (if you take out the 2nd)
Most lenders require a 680credit score for LPMI products
My score is up to 738 now. the LPMI loan sounds like something i'd be interested in. As far as coops, i'm looking for a sponsor sale (no board, no crazy rules) or an easy board and of course the building must be approved by the lender.
Where can I get info on lenders who do LPMI loans?
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