Cash Reserve to close on mortgage (insurance, loan, 401k plan, approval)
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Young and dumb here. So I'm in the process of buying my first condo. I have my lawyer look over documents, sign all the paper work, do the walk through, and three days before closing the mortgage company calls me and says that I am not qualified for the mortgage. "WHAT!!!!!" was my reply, i got my good faith estimate, started the paper work and thought I was good. But I sent her my bank statements a few weeks ago and now, 3 days before closing she says I don't have enough cash reserve......... me being young and dumb I didn't know I needed any, wasn't told i needed any and now don't know what to do. I live pretty much paycheck to paycheck, but my mortgage is the same amount i was paying toward my rent. so i can make the payments. I am learning about investing and working on ways to increase my cash flow, but I don't understand why I need cash reserve. after reading a few articles this evening I understand the concept now.
My question is, is there any way i can get around this and close on my closing day?
Any advice at all?
depends....FHA doesnt require reserves.
You need reserves in case you lose your job...how do you expect to pay the mortgage then?
Not sure what product would be appropriate for you until these questions are answered.
Purchase price? down payment? credit score? Debt to income ratio? Income? County/State?
renrig is right you need reserves in case of an emergency. you mentioned your mortgage is the same as your rent but did you factor in insurance and taxes? Your actual mortgage payment may be the same as your rent but if you have not included taxes and insurance and you're living paycheck to paycheck how are you going to pay for these two VERY IMPORTANT items.
Does having $$ in a 401K count as "cash reserve" for bank purposes? Obviously wouldn't plan on using that, but minus penalties, is it considered? (for those of us who are scraping thin to come up with 20% down)
I've run across this before. Contact your bank and see if you can use gift funds as reserves. And if so, and if you have a relative who you can get the money from, problem solved. But definition of relative is usu. phrased to mean immediate family.
I've run across this before. Contact your bank and see if you can use gift funds as reserves. And if so, and if you have a relative who you can get the money from, problem solved. But definition of relative is usu. phrased to mean immediate family.
Good luck...
And they will have to provide a notarized letter stating that the funds are indeed a GIFT and not a personal loan.
Yes. Only 70% of the vested balance can be used..minus any loans on it
Quote:
Originally Posted by sneezecake
Does having $$ in a 401K count as "cash reserve" for bank purposes? Obviously wouldn't plan on using that, but minus penalties, is it considered? (for those of us who are scraping thin to come up with 20% down)
Does having $$ in a 401K count as "cash reserve" for bank purposes? Obviously wouldn't plan on using that, but minus penalties, is it considered? (for those of us who are scraping thin to come up with 20% down)
Sneezecake -
The answer to your question is yes. For reserves purposes, you can count up to 70% of your 401k, 403b, IRA or other retirement account.
But don't get that confused, with using 401k money for down payment. Different ballgame. That's up to your 401k plan and whether or not you can take out a loan against your 401k for that purpose. If you are able to go that route then your 401k loan debt would be included in your monthly DTI for mortgage approval purposes.
The answer to your question is yes. For reserves purposes, you can count up to 70% of your 401k, 403b, IRA or other retirement account.
But don't get that confused, with using 401k money for down payment. Different ballgame. That's up to your 401k plan and whether or not you can take out a loan against your 401k for that purpose. If you are able to go that route then your 401k loan debt would be included in your monthly DTI for mortgage approval purposes.
question about 401K
Under my plan i can use up to 50% of my 401k as a LOAN for the purpose of purchasing a primary residence.
Any further distributions would be in the form of a "hardship withdrawal" with such withdrawl only approved under certain circumstances- one being the prevention of eviction or foreclosure of primary residence.
Do lenders differentiate between available Loans or Hardship Withdrawals when used for post-closing reserves?
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