Reply
New Visitor
Posts: 2
Registered: ‎09-21-2012
0

Take out personal loan to immediately pay back

There is a building company that is building a community, which takes FHA loans.  I was interested in building a new home that would cost $170,000.  The purchase agreement requires a 3.5% deposit, basically the minimal down payment for FHA loan, when you sign the purchase agreement.  The problem I have is that I was going to take a loan out of my 401K to put the 3.5% down plus closing costs.  The 401K loan requires that I have a purchase agreement that contains the purchase price, address of where the property is located, and both buyer and sellers signatures in order to get the 401K loan.  I was thinking of taking a personal loan out to put the 3.5% down, sign the purchase agreement with the 3.5% deposit, submit my loan application with the purchase agreement to my employer's 401K, and then use that I receive from my 401K to immediately pay off the personal loan. Will this look bad when going through underwriting?

Moderator Emeritus
Posts: 7,225
Registered: ‎09-16-2011
0

Re: Take out personal loan to immediately pay back

Sounds like it will. Does the 401k have a personal loan option unrelated to real estate?

Starting Score: 08/29/2011 TU 671 EQ 674
Current Score: TU 754 EQ 694 EX 697
Wallet: NFCU Visa Sig 25k, Amex Lowes 22k, NavCheck 15k, Amex PRG, Amex Zync, Discover It 13.5k, Amazon Visa 5k
Platinum Spade Garden Club Member: App Free since 1/1/13. No more apps til who knows when?
MyFICO Fitness Goal: 800s Club!



Take the myFICO Fitness Challenge
New Contributor
Posts: 52
Registered: ‎01-10-2012
0

Re: Take out personal loan to immediately pay back

Have you attempted to negotiate with the seller to obtain a 10 or 14 day period to provide earnest money?  This is not an unusual request and even though the current contractual language requires earnest money at contract signing I think it's a common point of negotiation and the agreement could be easily modified to accommodate this.

NFCU Cash Rewards $35k | NFCU Nav $15k | Cap 1 Venture $15k | Cap 1 Quick Silver | DCU Platinum Visa $10k | AMEX Delta Gold $5k | AMEX SPG $1k | AMEX Personal NPSL | Marriott Chase Visa $5k | Barclay Arrival M/C $5k | Barclay Rewards $2k | Nordstrom $2.5k | Cap 1 Platinum $1k | Flagstar Bank Visa $1k | Macy's $1.1k | Macy's Furniture $7.5k | Walmart $800

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions based on Experian or Equifax data (additional FICO® Score versions based on TransUnion data are not currently available on myFICO.com). Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.