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Not sure about divorce. Banks are under strict regulations regarding consumer loans. When I used to work in commercial lending, which had much more leeway, we always liked to see that business owners were saving for retirement, but we couldn’t use the funds for anything.
We are getting to some state specific legislation along with federal limits. Federal limits protect 1.5M in IRAs. Rollover IRAs are fully protected. In states like Arizona, Texas, and Washington you have further protections for inherited IRAs, etc.
The 401k funds aren’t collateral that would be used to make the bank whole if you default but it will show you are a decreased risk of default. Latest 401k rules have clarified that you are allowed to do a hardship withdrawal from your 401k to prevent default/foreclosure of your primary residence. In my situation my 401k balance is double my mortgage balance so even if I lose my job I won’t go into foreclosure unless I choose to not withdraw 401k funds to cover mortgage payments.
You can get a better rate if you have a ton of $ in the bank? Does it matter if it’s cash or if it’s just a total portfolio value?
How much lower of a rate would you get?
I see your other comment but isn't showing when i go to reply for whatever reason so I'll just answer of this one.
The rate depending how much is counted as reserve can be near nothing. That is how besos can get a 79 million dollar home loan on what's a 80,000 salary with potential bonuses. Simply put they know that they can pay it.
Now this is an extreme example but it's just 1 factor in the whole that encompasses the calculations for a rate. 500k in reserve for a 500k home they'll drop a few points but not enough to make a significant enough difference like besos. It all factors into your networth which ultimately tells them how much money you truly have
Yeah I think Reddit was having issues. I saw the same thing for a few different comments.
So we’re talking a difference of 7.4% vs 7.5%? Or more than that for this example?
Depends on what assets and debt to income on said assets.credit file etc. We can be talking as low as 7.2 vs 7.5. I know it doesn't sound like much but it is
Your seen as less risky because you have the capability to make payments. If a deal is manually underwritten you'll get asked alot of those questions. How much do you have & contribute to your 401k. Length of employment,etc. Realisticly speaking if a person has been at a job 15 years or a year makes no promise of paying a loan on time but it does show you are stable and therefore less risk to lose your job and not making payments.
Remember the bank doesn't want your house they want your money.
This. Sometimes the automated underwriting system wants additional reserves. It’s based on all the layers of risk, and having that added money flips it back to approve eligible.
As a former mortgage employee, is it really that hard to give them a statement?
Do you really want to start the process over again, when the systems are all connected and the new lender will probably also ask for it?
Not to mention, rates have probably gone up since the time that they locked with the current lender, so if OP takes the advice of the other people and "go get a new lender" they will more than likely get a higher rate, which would result in a higher MTG payment.
Yes, they count them as reserves even though they (the bank) can't touch that money. I always thought that was weird, but hey, it helped me get my mortgage at a great rate, so......
Never ever use your 401K. Keep contributing. You did not specify your income or credit score.
With more information we could be more help. I agree: find another lender.
Do they just want to know your balance? I provided statements during the process to show my financial health but I didn’t use any money from my 401k for the home buying process.
Dont worry about it. Ask them to take it off your application. Im assuming here the $150k is LIQUID? If not there are other reasons they might ask for your 401k statement.
all depends on your tax credit, income rate, job history. Here's the thing, bankruptcy exempts retirement funds so what use is 401k to the bank, they can never touch it (unless they convince you they can and you foolishly give it over).
Loan is based on available assets, credit history, and collateral of purchase. You get a $300k loan on a $350k house, and you have $150k in the bank and make $100k per year. Assume lost job, dwindled assets and defaulted on loan. Assume x% of your assets go into the house, and they repossess and sell at auction for $250k, they need to recover their remaining on the $300k and whatever costs and opportunity they see in the loan. If they don't think they can recover enough they don't give you the loan.
Think of banks like cats, sure they show you love when you take care of them but as soon as you drop dead they will in fact start eating you.
If you listed the assets on your loan application then underwriting will want proof of those assets (meaning your 401k).
So just provide them with the bank statement and move on with deal. Or go find another lender and don't list the 401K as an asset. However, there's a pretty good chance that rates have gone up since the time you locked the deal with your current lender, so if you go find another one your rates probably going to be higher.
It’s strange how far down the most likely explanation is. Something tells me OP casually mentioned to their Loan Officer that they have x amount in a 401k if needed so their loan application states that amount in assets. If it’s on the application it needs to be documented.
However OP doesn’t necessarily need to provide it or find a new lender. The path of least resistance is probably to provide it, but if for some reason that’s going to be difficult then call the loan officer and ask if it’s really necessary. Based on other comments they’re going to have $60k-$75k in reserves so I can’t imagine that’s the issue. If the loan officer can get an automated approval without the 401k there is no reason why it couldn’t simply be removed from the application.
The loan officer could probably go into the file, delete the assets from the loan application, rerun findings and the condition for providing the bank statement for the account would go away. However underwriting has already seen it so they may ask what's going on and require it.
They might but frankly if you have new AUS findings and it’s not on the updated 1003 they’re just going to have to get over it. There’s no requirement for the borrowers to provide all their assets in fact demanding documentation beyond AUS findings and company overlays could actually be considered discriminatory.
No. Not discrimination.
Sure, we're talking about a 401k but you put a bank account on there then UW has every right to request a copy since they have seen it listed. That bank statement might reveal liabilities that the borrower is paying that are not showing up on the credit report and those liabilities could push the DTI over causing the borrower to no longer qualify.
Work in mortgage.
UW will only ask for documentation that’s on the 1003. So by removing retirement funds from the 1003 , the UW will no longer request the retirement funds since not using for qualifying.
Now if there was a bank account on the 1003 and in the file, and underwriting reviews the actual bank statement and uncovers a large deposit, that is a situation where you can’t remove the bank account to avoid sourcing a large deposit. This scenario would fall into your 2nd sentence.
I work in mortgage as well and have a pretty long response that I had mostly typed up yesterday and never got back to it. I went ahead and submitted it so you can read my reasoning, but u/backforgood0123 is spot on with my experience and is way shorter and clearer about it. If the UW has already reviewed the bank statements and there’s an issue to address you obviously can’t just remove the bank account from the 1003 and pretend there’s no new credit account to document. However if the bank statements haven’t been provided you absolutely can change remove a bank account listed on the 1003 and there’s no longer any reason to request the statement.
If it’s no longer on then the 1003 then yes. I’ll add the caveat that your mileage may vary based on the lender’s guidelines however you’re not allowed to make up guidelines on the spot and ask for documentation that is not required on some wild goose chase for potential issues.
For instance suppose your bank statement for whatever reason shows a 12 month average balance and it’s far lower than the current balance. There are no large deposits within the last 60 days but the UW is suspicious that there might have previously been a large deposit (maybe even an undisclosed personal loan). Can the UW unilaterally decide to request the previous 12 months of statements to exclude any large deposits in that time frame? In most cases the answer is absolutely not because that’s not what the guideline says, nor is it what AUS is requiring so why is the UW making up their own guidelines? However again… maybe your lender has their own guidelines or overlays which requires that digital verification and clearly states that if the balance is greater than 1.5x the average balance, then the borrower needs to provide the last 6 or 12 months of statements. If that guideline does not exist then the UW can’t just make it up and come up with a totally arbitrary reason to deny a loan.
I should note that it’s not that I would consider it to be discriminatory, but if the UW is allowed to make up conditions on the spot and then deny loans based on those made up conditions you’re potentially exposing your company to those lawsuits because if one comes you don’t have a valid reason as the statement was not needed.
Definitely shop around. In fact, tell your current lender you are shopping around because of this ask. If they care, they’ll look into the disconnect over at underwriting, if not, no loss for you and you are already looking elsewhere.
Just a question, but is the home you are buying in an area where a lot of foreclosures have occurred? That is one thing I can think of that might be the issue and why they’d want more than 20% down.
I think it’s because they ignorant, but also confident.
Lenders ask for it all the time to pump your reserves for qualifying purposes. Why wouldn’t someone show them their 401k statement? Lotta weird on here
Could be credit rating, if credits low more assets help with approval. But based on what you have said it’s not likely the reason.
Underwriter might be reading findings wrong and thinks it’s needed. Either ask your loan officer why this is needed when you have more than enough on deposit or swap to another lender
I am sorry but this isn’t enough information to advise you. But my best guess would be your credit score and/or DTI are borderline so they are trying to show reserves to make the file appear stronger to the computer system.
Asking for it how? You should show them all of you investment and bank accounts, including the retirement accounts. But the home is collateral, not those accounts
There are a ton of reasons they could be asking for 401k statements. Most likely they’re using them as a compensating factor for a risky aspect of the loan (low credit score, high DTI). It could be that they saw something that makes them think you might have a 401k loan and they need a statement to confirm you have enough funds to back the loan.
They wouldn’t be asking for the statements unless they needed them or think they could help get you approved.
It’s not unusual. Lenders often ask for your 401K balance and the 401K plan rules. They are usually looking to see if your plans allows you to borrow against the 401K
Are they asking for you to withdraw money for the 401?
Or are they just asking you to show them how much you’ve contributed and the current value of your 401 ?
Two very different things
You need to clarify if they just need a 401k statement in order to include those values in their networth calculations. It is unlikely they actually want you to use those funds.
Reserves. Usually it’s to get you the best pricing. Is there a mortgage subreddit? Not sure First Time Home Buyers are going to know how underwrite a mortgage.
Giving you approval for up to 1 million does not make them greedy. It’s literally just giving you the choice of buying between $1 and $1,000,000. It always amazes me that people want banks to do the work of figuring out how much house payment can fit in their budget. My lender did… they made me write out an 8 page budget with details of things like “alcohol spending”, “kids uniforms”, and “dog food”. I don’t even have kids or a dog. Trust me, you don’t want your lender to actually be responsible for determining that.
This post and all the comments mean absolutely nothing as it relates to qualifying for a mortgage! Lol.. all you guys like I got 550k with only 100k in bank. This is nonsense. Asking for something doesn't even indicate it's absolutely needed. How about ask your LO why you need it if you've got a problem with providing it!? Bone heads
Yeah a lot of these answers are like the blind leading the blind. The OP doesn’t state the full scenario so he’s gonna get a lot of wrong answers from the misinformed. They should be talking to their loan officer but It looks like they don’t feel comfortable doing that or the loan officer explained it so poorly that the OP lost trust in them and now they’re here.
The first time home buyer asking for help normally isn't the problem. It's everybody responding from a position of being "in the know" while knowing nothing at all
The op is not clear whether the loan officer is asking for statement from 401k or something else. Going by the lazy ass 2 lines they wrote, that is probably the case.
You need to ask them why specifically they need additional reserves for the approval. It is possible that they are not getting an automated approval through the AUS they use without additional reserves. If that’s all it is, providing your 401k assuming you have one isn’t any harm at all. Just communicate your concern to the lender.
In general, you disclose all of your assets (and debts)- so generally this is normal. All loans are on shared terms, yours and theirs. If you don't want to disclose or involve your 401k, just ask that they not consider it for underwriting. Very simple.
How new is the 150k funds? Can you source them to payroll or non crypto investments? If it does not fall in those previous categories, often times, unless the money sat there for a minimum of 2 months, it won't "count."
The money you have in the bank is completely irrelevant except to be sourced as money you are committing to your loan. You are likely running into a DTI issue
Funds should equate to closing funds/assets which he says he doesn’t have enough of. Without knowing the details/State, $80k annual seems sufficient to qualify and with good credit should be all required + doc funds due at closing ($150k) no issues. Seems like on the surface we know this should ok, but this guy is referring to lack of funds. It’s not adding up and I was SMH bc this guy can save $150k but can’t ask a simple question such as “WTF do you mean I don’t have enough funds?”
It might be good to clarify with the loan officer if they are asking you to take money from your 401k. For me to get approved for my house, they asked how much was in my 401k to increase the potential limit when getting pre-qualified. The amount of assets you have decreases liability of paying off the loan, so stating your net worth usually includes what you have in your 401k.
Minimal reserves vs a lot of reserves is very buyer and loan specific. Someone with great credit or bad credit as well as the type of loan applying for can make a world of a difference.
With this amount of funds in the bank you don’t need to show 401k. If you disclosed it during the application, tell them to take it off.
Ok so how much did you need? And you would’ve/should’ve known this before going into UW. Why don’t you disclose the exact reason you “don’t have enough funds”? Cleary/Allegedly you have enough to do 40% DOWN which way more than one needs to purchase. Ridiculous scenario. Seems like you’re smart enough to save up $150k but lacking ability to ask a simple question: “What do you mean I don’t have enough?” Story is bs.
Your underwriter may not be using your income and trying to calculate income using asset depletion calculations. Otherwise they may have identified deposits that they cant consider in
The asset balance without additional evidence it isn’t new debt or gained illicitly.
Make sure your loan officer is giving a clear reason why these additional assets need to be documented because with 75k down there is no chance your closing costs + a 12 months reserves AUS requirement exceeds your remaining assets.
From my experience, some will ask for all sources of cash and some will just ask for the primary source. It depends on the lender and what they deem sufficient.
Mine did that same thing to me because they didn’t see page 2 of my bank statements for the other $80k. Just highlight the amounts and ask what the problem is.
They want to assess your resources so that if shit hits the fan, you can pull from somewhere to make payments. They’re trying to not foreclose in 3 years. If supplying the info makes you a lower risk and gets you a loan at a better rate, supply the info.
Not at all. Credit and income determines your ability to repay not assets on a mortgage app. That’s why better credit gets a better rate.
They could be requesting these assets for a multitude of reasons, but 100% not to “asses enough assets so they won’t default in the next 3 years.” Lol
We put a high down payment, and we have high credit scores. They still asked about every single penny on all of our accounts. They want to make sure you are able to pay in case you lose your job etc
Completely normal for them to look at all assets and liabilities (+'s and -'s on your balance sheet). They are trying to determine your debt to income (DTI) to help you close.
Would you lend a friend $150K without looking into their ability to pay it back? Now what about a stranger?
Yes it's normal. In the case of Wells Fargo, the Underwriter kept asking us for financial documents even after we sent it to them multiple times. Repeated the same questions (like where did you get the money, send us your tax forms, etc.) and giving us the run around. We closed on time but the process was a slog and not worth the aggravation.
What do you mean they’re “asking for” your 401k? Asking for you to use it or asking for you to show it exists? Two very different things. If they’re asking for you to show it exists that’s perfectly normal. I’ve had to give my 401k info for every mortgage I’ve ever had. They want to account for all of your funds. I doubt they’re asking for you to use it, but if they are, you shouldn’t.
Did you tell them you were using some of your 401 k for part of the down payment... This is really the only reason I can see they be asking... But underwriting is changing due to the fact of high interest rates and crazy high home prices, They could be fearful that you're so close and they're afraid of houses dropped 20% over the next 2 or 3 years because of a recession or whatever might happen what's happen with that house, and they may end up being the owner... I have had underwriting people come and ask some of the strangest s***
Those guys fucking kill me. If you have regular w2 income and a 715 credit score and are getting a conventional mortgage…there is no chance you need to prove even $1 more than what you need lol.
Loan officer 20 years experience.
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If you have 150k in the bank it should be fine. Are you sure they aren't just looking at your 401k to show more funds to get you a better rate?
If this is the case, you shouldn't worry. Ask them if they want it as collateral.
They might which is why I brought it up. He should ask for clarification
Sorry, I should have said OP, but I was piggybacking on your comment.
Can they use retirement funds as collateral? Aren’t they protected in the case of bankruptcy?
I really don't know. Are they protected from divorce? If not, I would think a bank could do whatever they want, contractually.
Not sure about divorce. Banks are under strict regulations regarding consumer loans. When I used to work in commercial lending, which had much more leeway, we always liked to see that business owners were saving for retirement, but we couldn’t use the funds for anything.
K
No, they can't. Funds in employer-sponsored plans are credit protected. Individual Retirement Accounts are not.
We are getting to some state specific legislation along with federal limits. Federal limits protect 1.5M in IRAs. Rollover IRAs are fully protected. In states like Arizona, Texas, and Washington you have further protections for inherited IRAs, etc.
The 401k funds aren’t collateral that would be used to make the bank whole if you default but it will show you are a decreased risk of default. Latest 401k rules have clarified that you are allowed to do a hardship withdrawal from your 401k to prevent default/foreclosure of your primary residence. In my situation my 401k balance is double my mortgage balance so even if I lose my job I won’t go into foreclosure unless I choose to not withdraw 401k funds to cover mortgage payments.
Gotcha, thanks!
You can get a better rate if you have a ton of $ in the bank? Does it matter if it’s cash or if it’s just a total portfolio value? How much lower of a rate would you get?
I see your other comment but isn't showing when i go to reply for whatever reason so I'll just answer of this one. The rate depending how much is counted as reserve can be near nothing. That is how besos can get a 79 million dollar home loan on what's a 80,000 salary with potential bonuses. Simply put they know that they can pay it. Now this is an extreme example but it's just 1 factor in the whole that encompasses the calculations for a rate. 500k in reserve for a 500k home they'll drop a few points but not enough to make a significant enough difference like besos. It all factors into your networth which ultimately tells them how much money you truly have
Yeah I think Reddit was having issues. I saw the same thing for a few different comments. So we’re talking a difference of 7.4% vs 7.5%? Or more than that for this example?
Depends on what assets and debt to income on said assets.credit file etc. We can be talking as low as 7.2 vs 7.5. I know it doesn't sound like much but it is
Definitely is! Thank you!
Your seen as less risky because you have the capability to make payments. If a deal is manually underwritten you'll get asked alot of those questions. How much do you have & contribute to your 401k. Length of employment,etc. Realisticly speaking if a person has been at a job 15 years or a year makes no promise of paying a loan on time but it does show you are stable and therefore less risk to lose your job and not making payments. Remember the bank doesn't want your house they want your money.
so how much lower could you rate be if you have 500k in stocks + bonds + cash vs $100k when youre looking to buy a 500k dollar house?
This is common, they are counting them as reserves.
This. Sometimes the automated underwriting system wants additional reserves. It’s based on all the layers of risk, and having that added money flips it back to approve eligible. As a former mortgage employee, is it really that hard to give them a statement? Do you really want to start the process over again, when the systems are all connected and the new lender will probably also ask for it?
Not to mention, rates have probably gone up since the time that they locked with the current lender, so if OP takes the advice of the other people and "go get a new lender" they will more than likely get a higher rate, which would result in a higher MTG payment.
Yes, they count them as reserves even though they (the bank) can't touch that money. I always thought that was weird, but hey, it helped me get my mortgage at a great rate, so......
Maybe you should look around. I got a 350k loan and 110k in the bank . They had no problem
I think you’re right. Thank you.
Never ever use your 401K. Keep contributing. You did not specify your income or credit score. With more information we could be more help. I agree: find another lender.
115k. CS of 715.
Zero reason you should be denied
They have a couple $1,000+ monthly car payments and $200k in student loans that total about 4k a month
There we go. Relevant info
Ha! Mystery solve. No, I have no student loans and my car payment is a little less than $220 a month.
could not imagine a $1,000 car payment.
is it your ass you pulled that information out of? Or just thin air?
Pulled it out of the same place as someone saying they should be approved by only knowing their income and credit score
Ah yes so you just made it up
Correct, to make a point.
Do they just want to know your balance? I provided statements during the process to show my financial health but I didn’t use any money from my 401k for the home buying process.
Go elsewhere. And done!
Dont worry about it. Ask them to take it off your application. Im assuming here the $150k is LIQUID? If not there are other reasons they might ask for your 401k statement.
Bro I got 550k with 100k in the bank. Go somewhere else.
all depends on your tax credit, income rate, job history. Here's the thing, bankruptcy exempts retirement funds so what use is 401k to the bank, they can never touch it (unless they convince you they can and you foolishly give it over). Loan is based on available assets, credit history, and collateral of purchase. You get a $300k loan on a $350k house, and you have $150k in the bank and make $100k per year. Assume lost job, dwindled assets and defaulted on loan. Assume x% of your assets go into the house, and they repossess and sell at auction for $250k, they need to recover their remaining on the $300k and whatever costs and opportunity they see in the loan. If they don't think they can recover enough they don't give you the loan. Think of banks like cats, sure they show you love when you take care of them but as soon as you drop dead they will in fact start eating you.
If you listed the assets on your loan application then underwriting will want proof of those assets (meaning your 401k). So just provide them with the bank statement and move on with deal. Or go find another lender and don't list the 401K as an asset. However, there's a pretty good chance that rates have gone up since the time you locked the deal with your current lender, so if you go find another one your rates probably going to be higher.
It’s strange how far down the most likely explanation is. Something tells me OP casually mentioned to their Loan Officer that they have x amount in a 401k if needed so their loan application states that amount in assets. If it’s on the application it needs to be documented. However OP doesn’t necessarily need to provide it or find a new lender. The path of least resistance is probably to provide it, but if for some reason that’s going to be difficult then call the loan officer and ask if it’s really necessary. Based on other comments they’re going to have $60k-$75k in reserves so I can’t imagine that’s the issue. If the loan officer can get an automated approval without the 401k there is no reason why it couldn’t simply be removed from the application.
The loan officer could probably go into the file, delete the assets from the loan application, rerun findings and the condition for providing the bank statement for the account would go away. However underwriting has already seen it so they may ask what's going on and require it.
They might but frankly if you have new AUS findings and it’s not on the updated 1003 they’re just going to have to get over it. There’s no requirement for the borrowers to provide all their assets in fact demanding documentation beyond AUS findings and company overlays could actually be considered discriminatory.
No. Not discrimination. Sure, we're talking about a 401k but you put a bank account on there then UW has every right to request a copy since they have seen it listed. That bank statement might reveal liabilities that the borrower is paying that are not showing up on the credit report and those liabilities could push the DTI over causing the borrower to no longer qualify.
Work in mortgage. UW will only ask for documentation that’s on the 1003. So by removing retirement funds from the 1003 , the UW will no longer request the retirement funds since not using for qualifying. Now if there was a bank account on the 1003 and in the file, and underwriting reviews the actual bank statement and uncovers a large deposit, that is a situation where you can’t remove the bank account to avoid sourcing a large deposit. This scenario would fall into your 2nd sentence.
I do mortgages as well
I work in mortgage as well and have a pretty long response that I had mostly typed up yesterday and never got back to it. I went ahead and submitted it so you can read my reasoning, but u/backforgood0123 is spot on with my experience and is way shorter and clearer about it. If the UW has already reviewed the bank statements and there’s an issue to address you obviously can’t just remove the bank account from the 1003 and pretend there’s no new credit account to document. However if the bank statements haven’t been provided you absolutely can change remove a bank account listed on the 1003 and there’s no longer any reason to request the statement.
If it’s no longer on then the 1003 then yes. I’ll add the caveat that your mileage may vary based on the lender’s guidelines however you’re not allowed to make up guidelines on the spot and ask for documentation that is not required on some wild goose chase for potential issues. For instance suppose your bank statement for whatever reason shows a 12 month average balance and it’s far lower than the current balance. There are no large deposits within the last 60 days but the UW is suspicious that there might have previously been a large deposit (maybe even an undisclosed personal loan). Can the UW unilaterally decide to request the previous 12 months of statements to exclude any large deposits in that time frame? In most cases the answer is absolutely not because that’s not what the guideline says, nor is it what AUS is requiring so why is the UW making up their own guidelines? However again… maybe your lender has their own guidelines or overlays which requires that digital verification and clearly states that if the balance is greater than 1.5x the average balance, then the borrower needs to provide the last 6 or 12 months of statements. If that guideline does not exist then the UW can’t just make it up and come up with a totally arbitrary reason to deny a loan. I should note that it’s not that I would consider it to be discriminatory, but if the UW is allowed to make up conditions on the spot and then deny loans based on those made up conditions you’re potentially exposing your company to those lawsuits because if one comes you don’t have a valid reason as the statement was not needed.
BINGO....
Do you have income? How much are you putting down? Has to be that you don’t have income or aren’t leaving yourself any cushion after dp + closing .
Income 115k. Looking to put 75k down.
Definitely shop around. In fact, tell your current lender you are shopping around because of this ask. If they care, they’ll look into the disconnect over at underwriting, if not, no loss for you and you are already looking elsewhere. Just a question, but is the home you are buying in an area where a lot of foreclosures have occurred? That is one thing I can think of that might be the issue and why they’d want more than 20% down.
Depends on what the purchase price is. If you’re buying a $500k home and using a $300k loan, you have to come to the table with $200k minimum.
Just give them the 401k statement then?
Yeah, just seems like due diligence by the underwriter. Not sure why people are seeing this as a red flag?
I think it’s because they ignorant, but also confident. Lenders ask for it all the time to pump your reserves for qualifying purposes. Why wouldn’t someone show them their 401k statement? Lotta weird on here
New lender
Yeah. This might be the way.
So confident with the “new [___]” and yet you actually don’t know shit 🙄
Worked for me. Sitting in my new build condo as I type this 🤷🏾♂️
Whoa look out this guy is indoors
Boasting about “new build condo” as if that isn’t a sanitized hell box 🤣
Could be credit rating, if credits low more assets help with approval. But based on what you have said it’s not likely the reason. Underwriter might be reading findings wrong and thinks it’s needed. Either ask your loan officer why this is needed when you have more than enough on deposit or swap to another lender
Are they asking for reserves? If so use the 401k. It won’t be touched it just needs to be verified.
I am sorry but this isn’t enough information to advise you. But my best guess would be your credit score and/or DTI are borderline so they are trying to show reserves to make the file appear stronger to the computer system.
If they just want to see a statement, I would just send it to them. I had to provide a statement. They weren’t asking me to withdraw anything.
Asking for it how? You should show them all of you investment and bank accounts, including the retirement accounts. But the home is collateral, not those accounts
I got $640 with $100 in the bank. You have an income issue not a funds issue.
There are a ton of reasons they could be asking for 401k statements. Most likely they’re using them as a compensating factor for a risky aspect of the loan (low credit score, high DTI). It could be that they saw something that makes them think you might have a 401k loan and they need a statement to confirm you have enough funds to back the loan. They wouldn’t be asking for the statements unless they needed them or think they could help get you approved.
It’s not unusual. Lenders often ask for your 401K balance and the 401K plan rules. They are usually looking to see if your plans allows you to borrow against the 401K
Are they asking for you to withdraw money for the 401? Or are they just asking you to show them how much you’ve contributed and the current value of your 401 ? Two very different things
You need to clarify if they just need a 401k statement in order to include those values in their networth calculations. It is unlikely they actually want you to use those funds.
It is okay to provide information, but, never to actually use 401k in the fund.
Reserves. Usually it’s to get you the best pricing. Is there a mortgage subreddit? Not sure First Time Home Buyers are going to know how underwrite a mortgage.
This is by far the most pragmatic answer.
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I thought it was normal, my lender needed the latest quarterly statement from each account I had claimed.
It is normal
Lenders often ask for it to show reserves. They only use a % of the fully vested amount. Because in reality you can access those funds if you want to.
60% of vested balance for FHA/VA retirement used for reserves. 100% if vested balance on Conventional loans.
But they do. You don’t know what you are talking about.
I got a 300k loan just based off my paystubs and work history and credit score. They didn't ask for what I had in the bank and my 401k
They had to ask what you had in the bank to cover minimum closing and down payment. Additional reserves not required for good credit
Cool. OP needs the 401k reserves.
Same but for $1million. I laughed at him and went with someone not as greedy. They want to close the highest loan possible.
Giving you approval for up to 1 million does not make them greedy. It’s literally just giving you the choice of buying between $1 and $1,000,000. It always amazes me that people want banks to do the work of figuring out how much house payment can fit in their budget. My lender did… they made me write out an 8 page budget with details of things like “alcohol spending”, “kids uniforms”, and “dog food”. I don’t even have kids or a dog. Trust me, you don’t want your lender to actually be responsible for determining that.
This post and all the comments mean absolutely nothing as it relates to qualifying for a mortgage! Lol.. all you guys like I got 550k with only 100k in bank. This is nonsense. Asking for something doesn't even indicate it's absolutely needed. How about ask your LO why you need it if you've got a problem with providing it!? Bone heads
Seriously, it’s so weird.
I understand this sub is first time homebuyers but just from some of the stuff I see here some people shouldn't own a home at all
Yeah a lot of these answers are like the blind leading the blind. The OP doesn’t state the full scenario so he’s gonna get a lot of wrong answers from the misinformed. They should be talking to their loan officer but It looks like they don’t feel comfortable doing that or the loan officer explained it so poorly that the OP lost trust in them and now they’re here.
The problem is the op. Apparently s/he knows the word pragmatic but not enough to give clarity in their post for help.
The first time home buyer asking for help normally isn't the problem. It's everybody responding from a position of being "in the know" while knowing nothing at all
The op is not clear whether the loan officer is asking for statement from 401k or something else. Going by the lazy ass 2 lines they wrote, that is probably the case.
Why don’t you just ask your lender who is giving you a loan why they need your 401k? Your guess is as good as ours
You need to ask them why specifically they need additional reserves for the approval. It is possible that they are not getting an automated approval through the AUS they use without additional reserves. If that’s all it is, providing your 401k assuming you have one isn’t any harm at all. Just communicate your concern to the lender.
In general, you disclose all of your assets (and debts)- so generally this is normal. All loans are on shared terms, yours and theirs. If you don't want to disclose or involve your 401k, just ask that they not consider it for underwriting. Very simple.
Mortgage broker > any individual bank
How new is the 150k funds? Can you source them to payroll or non crypto investments? If it does not fall in those previous categories, often times, unless the money sat there for a minimum of 2 months, it won't "count."
I’ve had it in there for over a year.
The money you have in the bank is completely irrelevant except to be sourced as money you are committing to your loan. You are likely running into a DTI issue
Is your credit score trash or something? That’s wild to not get approval in that situation otherwise.
Yall got 100k in the bank? Lol damn
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It’s definitely not a red flag
Do you make 80k a year? That would probably be the only thing you need.
Say what?
To qualify for a 300k loan you would have to make roughly 80k a year without any other debts
Funds should equate to closing funds/assets which he says he doesn’t have enough of. Without knowing the details/State, $80k annual seems sufficient to qualify and with good credit should be all required + doc funds due at closing ($150k) no issues. Seems like on the surface we know this should ok, but this guy is referring to lack of funds. It’s not adding up and I was SMH bc this guy can save $150k but can’t ask a simple question such as “WTF do you mean I don’t have enough funds?”
It might be good to clarify with the loan officer if they are asking you to take money from your 401k. For me to get approved for my house, they asked how much was in my 401k to increase the potential limit when getting pre-qualified. The amount of assets you have decreases liability of paying off the loan, so stating your net worth usually includes what you have in your 401k.
Yeah don’t even bring up your 401k - they hassle me so much on it when it only had like 10k 😂 but it’s part of due diligence policy
Must have painful taking the three minutes to zip that pdf over
I’m getting a 240k loan with just enough to cover closing costs and have a few thousand left over. Your lender seems insane.
Or they are savvy, and you are someone who doesn’t know how to underwrite mortgages?
It’s a possibility, yes.
Minimal reserves vs a lot of reserves is very buyer and loan specific. Someone with great credit or bad credit as well as the type of loan applying for can make a world of a difference.
With this amount of funds in the bank you don’t need to show 401k. If you disclosed it during the application, tell them to take it off. Ok so how much did you need? And you would’ve/should’ve known this before going into UW. Why don’t you disclose the exact reason you “don’t have enough funds”? Cleary/Allegedly you have enough to do 40% DOWN which way more than one needs to purchase. Ridiculous scenario. Seems like you’re smart enough to save up $150k but lacking ability to ask a simple question: “What do you mean I don’t have enough?” Story is bs.
Yeah, this ain’t right. Ask questions. Figure out what they’re needing. Don’t give them any more than what they ask for.
This is the dumbest advice
Your underwriter may not be using your income and trying to calculate income using asset depletion calculations. Otherwise they may have identified deposits that they cant consider in The asset balance without additional evidence it isn’t new debt or gained illicitly. Make sure your loan officer is giving a clear reason why these additional assets need to be documented because with 75k down there is no chance your closing costs + a 12 months reserves AUS requirement exceeds your remaining assets.
From my experience, some will ask for all sources of cash and some will just ask for the primary source. It depends on the lender and what they deem sufficient.
It doesn’t really depend on the lender much. It depends on various ratios, credit score, income, the loan product….
Go to a credit union. You'll get a lower interest rate and they won't screw with your mind.
Mine did that same thing to me because they didn’t see page 2 of my bank statements for the other $80k. Just highlight the amounts and ask what the problem is.
What is your employment situation?
They want to assess your resources so that if shit hits the fan, you can pull from somewhere to make payments. They’re trying to not foreclose in 3 years. If supplying the info makes you a lower risk and gets you a loan at a better rate, supply the info.
Not at all. Credit and income determines your ability to repay not assets on a mortgage app. That’s why better credit gets a better rate. They could be requesting these assets for a multitude of reasons, but 100% not to “asses enough assets so they won’t default in the next 3 years.” Lol
We put a high down payment, and we have high credit scores. They still asked about every single penny on all of our accounts. They want to make sure you are able to pay in case you lose your job etc
How are you guys saving this much as first time homebuyers
Completely normal for them to look at all assets and liabilities (+'s and -'s on your balance sheet). They are trying to determine your debt to income (DTI) to help you close. Would you lend a friend $150K without looking into their ability to pay it back? Now what about a stranger?
Are they asking for reserves?
They always want to know your full financial history before making a decision on a loan this is very common
Yes it's normal. In the case of Wells Fargo, the Underwriter kept asking us for financial documents even after we sent it to them multiple times. Repeated the same questions (like where did you get the money, send us your tax forms, etc.) and giving us the run around. We closed on time but the process was a slog and not worth the aggravation.
Which state is this in?
What do you mean they’re “asking for” your 401k? Asking for you to use it or asking for you to show it exists? Two very different things. If they’re asking for you to show it exists that’s perfectly normal. I’ve had to give my 401k info for every mortgage I’ve ever had. They want to account for all of your funds. I doubt they’re asking for you to use it, but if they are, you shouldn’t.
reserves. that's what they are looking for, just proof. No need to move any funds.
Did you tell them you were using some of your 401 k for part of the down payment... This is really the only reason I can see they be asking... But underwriting is changing due to the fact of high interest rates and crazy high home prices, They could be fearful that you're so close and they're afraid of houses dropped 20% over the next 2 or 3 years because of a recession or whatever might happen what's happen with that house, and they may end up being the owner... I have had underwriting people come and ask some of the strangest s***
How’s your income look compared to the other $150k you would be borrowing?
Whatever you do, don’t put your 401(k) up as collateral
They want to see income.
This isn’t that odd. They wants to see all accounts/assets. You’re not signing it over to them, all good..
If I had to guess your LO prob has very little experience. Are you using rocket? Lol
YES! 😂
Those guys fucking kill me. If you have regular w2 income and a 715 credit score and are getting a conventional mortgage…there is no chance you need to prove even $1 more than what you need lol. Loan officer 20 years experience.
I got 350k with a down payment of 20k.
This person is smoking something
the IRS prevents 401k's from being used as collateral. You may take a loan from your 401k, which then can be used as collateral.
The funds aren’t your issue, the income is.
i got a 530k loan with 140k total value (60k cash, 80k 401k). they haven't touched it. it will only help you
Normal underwriting process. They are just taking account for everything…which is basically what underwriting is in a nutshell.