LO says 7k too much saved for USDA?!?!

[jcstarkey8826]

So my friend just went to a new mortgage company. He didnt do USDA before and now he does. I really want to use him because we are close and he would do whats best for me, not his pocket. I have all of the paperwork together SSC, ID, W2s, Paystubs, etc, and asked him how much we should have saved before we start. He said they dont do USDA if you have more than 7k in liquid assets. So he suggested to move some to a family members account, and just keep between 3-5k and be willing/ready to spend it all.

Anyone else ever been limited on the amount of money you were allowed to have? What other odd stipulations have you come accross with these loans. Just trying to be as prepared as possible.

Thanks

[webhopper]

Before you give the money away, I would consider a number of options...  Educational Savings Accounts for your kids,  roth IRA, traditional IRA....   

there are things you can do with this extra money...  If you have a car loan or something of that nature, You can pay down the principle on your car.

[webhopper]

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@webhopper wrote:

Before you give the money away, I would consider a number of options...  Educational Savings Accounts for your kids,  roth IRA, traditional IRA....   

there are things you can do with this extra money...  If you have a car loan or something of that nature, You can pay down the principle on your car.

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You can also do a "uniform gift to minors"  where you gift the money and its tax free.   You can load it onto a Pre-paid visa and use it for furnishings after you get the house...  erm... lots of options

[jcstarkey8826]

I would never just spend money to spend it lol you have given me great options! I dont have children, and already have retirement set up, so I think I'll go with the preloaded cards, because we will for sure need appliances and furniture. I just didnt know what to do with the extra cash.

Thought it was a strange stipulation though haha

[languedoctor]

My best guess is that requirements like these are meant to ensure that rural development mortgages are loans-of-last-resort.

The broker I worked with on my recent purchase told me that she's not supposed to send a mortgage through USDA if she can get approval through other means. I don't know whether that's a rule of thumb or a formal policy, but my guess is that's what's going on: the LO is not supposed to ask for a 100% federal guarantee if the borrower can swing an FHA down payment.

[jcstarkey8826]

I feel kind of bad now. I mean, we can do FHA, we just preferred to do USDA. We are first time home buyers and want to keep as much money on hand. We dont know what to expect with owning a home, and want to be prepared. While we might have more than 7k saved, we dont want to get a house and not be able to buy appliances, furniture, lawnmowers, etc.

I'll keep it aside for now.

[pizzadude]

If he just bought a CD with the money would that work ?  It wouldn't exactly count as "liquid" anymore...is that right ?

[jcstarkey8826]

the only issue with not having it liquid is that the money will be tied up and we wont have access to it. I just wanted to spend about 5k getting in and have another 3k-5k to sit on for a nest egg/unexpected housing needs.

[FrugalRican]

If you tie the money up in a CD, it's technically still liquid.

You'll just take a penalty on the interest for early withdrawal.

I wouldn't spend, just to spend, just to meet a requirement.

You'd be better off just withdrawing the money and putting it in a safe if that's the case (as long as you're not doing anything for a few months).

[jcstarkey8826]

its about 2 and a half months away, so pretty much any money we save past this point has to be kept elsewhere. We dont have a safe and her mom offered to open a savings account at the bank she works for in her name and then close it when we get the house.