Here are the questions the underwriter is asking.

[Anonymous]

So today I heard from the LO that the underwriter wanted to know the following, so I wanted to know what you guys think.

1. Will I be removing cash from my 401K for the purchase.

2. What are the rent amounts, and how many tenants occupy the units, and how many total units are there? (I am purchasing a multi-unit).

3. Do I plan to convert any of the units. (This question I am not to worried about, because I am not going to convert anything).

So the main thing I am worried about is them asking about if I will be removing money from my 401K, and the rent amounts. It seems like they are worried about where the cash is at, or maybe think there isn't enough cash in my scenario.  I have about $20K in cash reserves so I do not need to touch my 401K although it is a plan that allows withdrawals. It is a FHA loan so I only need the 3.5% plus closing costs. Secondly, there are already 3 tenants residing there so I am hoping that the income from these tenants meets what the lender is looking for income wise.

Maybe I am reading to much into this so let my know what you guys think.  I have my finger crossed, and everyone please send good vibes...... Sigh, the journey continues!

[BrianB_The_Loan_Professor]

multi unit FHA loans are done completely different

If it is a 3 unit the rent from the units must be sufficient to cover the mortgage to qualify

I dont know if you need to get worried but you need to give them what they want

If you dont plan on using the 401k tell them -

If 20k is enough then it shouldnt be a big deal

B

[Anonymous]

In the aftermath of the market meltdown a LOT of lenders are very weary, especially in regards to investment / multi properties. The reason behind the questions is due to not only internal banking, but also regulatory changes that have taken place requiring EVERYTHING to be documented from the type screws holding the door up to the exactly color code of the wiring (hopefully you got the jab).

These are completely normal where they're simply determining if:

1. You truly have the funds liquid in hand and aren't "borrowing" them from another source (family, friend, investor, 401k, etc)

2. You aren't going to drastically change the property which has the potential of a drastic reduction in value of the property (i.e. increased risk of loss to the bank if you default)

3. The property generates sufficient income to cover the costs of the mortgage, typically figured at 75% occupancy however this varies based on the financial institution (again mitigating the risk exposure for the bank)

[Anonymous]

I can understand that they are trying to make sure I will be able to repay the loan. They are also asking now how long have the tenants lived there and do they plan to stay after the transfer of ownership. I am becoming more nervous because I think they are leaning towards denying the loan since all of these questions are coming up. I know this is an unique situation but you would think they that could offer an answer up front versus stringing a person along for 2-3 weeks and steady making you pay for appraisals and inspections, etc without any indication of whether it will be approved or denied. Geez, this is the most stressful situation.

I am wondering if I should start trying to go through another lender or what. I already had to have the contract extended twice because they have not been able to make a decision yet, and I have been in contract since the end of May. I need advice Help.