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It is important to provide documentation about your retirement
accounts or 401K programs because this is another asset you
could draw upon as reserves in case of a problem. It is also
another way to show you have a savings history. Just provide
a copy of your most recent statement to your lender.
Many people use these accounts as a source of funds for
their down payment, too. Some employers allow you to "cash
out" a portion of the 401K and some allow you to borrow
against it. Be sure to keep copies of all paperwork involving
the transaction. If they cut you a check, be sure to make
a photocopy of that, too, including any receipt for deposit
into your personal bank account.
If you are borrowing against your 401K, some lenders will
count this as an additional debt to go along with car payments,
credit cards and other obligations. This may seem kind of
silly because you are borrowing your own money, but from
the lender’s viewpoint it is still a monthly obligation
that you must come up with and should be taken into account.
If you are "tight" on your debt-to-income ratios
in qualifying for a home loan, this could be an important
consideration. It may affect whether you choose to cash out
the account and pay any tax penalty, or simply borrow against
it.
copyright 2000 by Terry Light and
RealEstate ABC
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