Preapproval question

[Anonymous]

Maybe a silly question... To be pre approved do you have to have a bit of savings in an account? And if so does a 401k count as savings?

[StartingOver10]

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@Anonymous wrote:

Maybe a silly question... To be pre approved do you have to have a bit of savings in an account? And if so does a 401k count as savings?

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Yes and yes.

One of the items the lender is looking for is enough cash for your down payment and closing costs.

If you are getting a zero down payment loan or down payment assistance or closing cost assistance, that will be taken into account too.

[Anonymous]

I don't know whether it does, but a 401K shouuld not count unless you can make a penalty free withdrawal. Even if you can, you should use money from a savings account, not your tax-advantaged 401k. 

[VanRickets]

We will be using 401k funds for part of the down payment.  Our financial advisor ran scenarios and even with the 10% withdrawal penalty, we are better off.  If you can use the funds for extra downpayment and avoid paying PMI, you will be better off in the long run.

[Anonymous]

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@VanRickets wrote:

We will be using 401k funds for part of the down payment.  Our financial advisor ran scenarios and even with the 10% withdrawal penalty, we are better off.  If you can use the funds for extra downpayment and avoid paying PMI, you will be better off in the long run.

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Thank you! Yes, this is what we are thinking as well might be the best case in our scenario.