topic Re: Question about 401k money in Mortgage Loans

Question about 401k money

Anonymous — Thu, 13 Feb 2014 16:11:14 GMT

I will be looking to get a mortgage in April/May of this year. Will first first time home buyer. Getting married in July. Here is my question. I don't have any money in savings (two young adult children, one in college - need I say more?) but I do have a 401k worth $52,000 through my employer. However - it is the kind that I cannot touch for any reason until I am 55. My sweetheart does have about $12k in savings and about $12k in 401k. We plan to apply together. My question is - will they consider my 401k?

I am working on cleaning up my credit history and improving my score. Just paid off two CCs and plan to pay off two more in the next few weeks. I am unsure of sweeties scores as he has not pulled them yet. He believes them to be very good.

Thanks!

EX - 609 EQ - 658 TU - 639 (01/30/14)

Re: Question about 401k money

edcampbell613 — Thu, 13 Feb 2014 16:39:22 GMT

if it is not liquid then they wont be able to use it.

Re: Question about 401k money

n0smirc — Thu, 13 Feb 2014 16:43:36 GMT

They don't even allow you to take a loan against the 401K? If you can take a loan against it, then they should be able to count it. My company said the same thing about our 401k's but I research it and found that loans were just fine against the 401k for any purpose that the account holder saw fit.

Re: Question about 401k money

Anonymous — Thu, 13 Feb 2014 16:48:58 GMT

Well - that is what I thought. I could be wrong but my understanding is that the University has it set up where it cannot be touched until you turn 55.

Re: Question about 401k money

ShanetheMortgageMan — Thu, 13 Feb 2014 17:14:02 GMT

Sounds more like a pension than a 401k. Ask the HR department for a copy of the Summary Plan Description, in there it'll spell out the terms (if any) for borrowing against it or just withdrawing.

Also, most loans don't require that you have reserves, so you may not even need your 401k funds to qualify.

Re: Question about 401k money

Anonymous — Thu, 13 Feb 2014 17:27:29 GMT

It is not a pension as I contribute to it. It's through TIAA-CREF. I have just been told they don't allow us to borrow against it. I'm very uneasy applying for mortgage with my credit score/history.

Re: Question about 401k money

ShanetheMortgageMan — Thu, 13 Feb 2014 17:45:45 GMT

A 639 score isn't the best, but it can certainly qualify. Not sure what is on your credit that is bringing your scores down though. If you've had clean credit for the past 12 months, and have never had a BK/foreclosure/short sale/deed in lieu, then your credit is probably fine... although your scores could use some improvement to allow you to qualify for better rates.

Re: Question about 401k money

Anonymous — Thu, 13 Feb 2014 17:47:58 GMT

Credit is clean for since 2011. Had some problems in the past. Did have a BK but it's so old it no longer appears on credit report. It was chapter 13 which I did satisfy.

Re: Question about 401k money

coterotie — Thu, 13 Feb 2014 19:10:50 GMT

Apparently many Universities have this provision for some reason. We can't touch my wife's for ANY reason at any age until she leaves employment. We lost our house, even though we had enough in the account to pay off the mortgage with a bunch left over. No emergency withdrawal etc. period. We even tried to see if they would let her quit for a day take the money out and then get re-hired. Of course they wouldn't have been able to re-hire her because of the foreclosure. We're stuck with TIAA-CREF as well along with the University restricting the types of investments. This has made it very hard to achieve above average returns or be defensive in market pull-backs. But the restrictive policies are not from TIAA-CREF but from the University/Employer.

All that being said, it is still counted as a reserve for mortgage application purposes according to our mortgage banker.

@Anonymous wrote:
It is not a pension as I contribute to it. It's through TIAA-CREF. I have just been told they don't allow us to borrow against it. I'm very uneasy applying for mortgage with my credit score/history.

Re: Question about 401k money

Anonymous — Thu, 13 Feb 2014 19:20:26 GMT

It is odd isn't it? My son actually worked at the same university. He left his positon and STILL can't touch the money until he is 55.... Talk about restrictive..

Re: Question about 401k money

DallasLoanGuy — Thu, 13 Feb 2014 20:04:36 GMT

if it can't be touched..... it will not be put on the loan ap

Re: Question about 401k money

Anonymous — Thu, 13 Feb 2014 20:05:41 GMT

Just a question because I am curious - but how would they know if it can/cannot be touched?

Re: Question about 401k money

ShanetheMortgageMan — Thu, 13 Feb 2014 20:30:34 GMT

@Anonymous wrote:
Credit is clean for since 2011. Had some problems in the past. Did have a BK but it's so old it no longer appears on credit report. It was chapter 13 which I did satisfy.

If your credit has been clean for 3+ years, and you've re-established it with at least 12 months of new credit since then, I'd say your chances of your credit being acceptable is very good.

Re: Question about 401k money

ShanetheMortgageMan — Thu, 13 Feb 2014 20:31:27 GMT

@Anonymous wrote:
Just a question because I am curious - but how would they know if it can/cannot be touched?

In order to use it, you have to prove you can use it. That is what the Summary Plan Description lays out. So if you cannot provide documentation that says you can access it, it won't be used.

Re: Question about 401k money

Anonymous — Thu, 13 Feb 2014 20:32:20 GMT

Gotcha. Thanks for the information. I have a long way to go in the learning process! My fiancés' is liquid - so we can list those as assets?

Re: Question about 401k money

ShanetheMortgageMan — Thu, 13 Feb 2014 20:34:10 GMT

@Anonymous wrote:
Gotcha. Thanks for the information. I have a long way to go in the learning process! My fiancés' is liquid - so we can list those as assets?

Yes, for sure.

Re: Question about 401k money

Anonymous — Thu, 13 Feb 2014 20:35:42 GMT

I just found out today my EQ score has jumped to 678! My mid score is still 639 but from what I can tell the CCs I paid off have not reported to TU yet (mid score). I am hoping for a significant jump there since I saw a 23 point jump in EQ in less than 2 weeks.

Re: Question about 401k money

Anonymous — Thu, 13 Feb 2014 20:40:27 GMT

Also just Found out today Fiancés FICO is 839...so I think we will be ok!