Understanding Assets?

[EaglesFan2006]

Hello,

I realize I've asked a lot of questions haha, very stressful time.

I'm wondering if someone can explain what lenders are looking for in terms of assets at closing time.  Now my lender has said i'm all good but I want to be sure.  I'm planning to take a 401k loan to help subsidize my down payment and closing costs.  In order to do this with better 401k loan terms, I need the purchase contract in order to request the loan.  So obviously, if I close 30 days after contract, that money won't be sitting in my bank account for 60 days as I read is recommended.  Is that okay since its my money and they have the 401k info that I already provided?

Also, what are they looking for in reserves.  My lender drew up a closing doc for me where the first year of PMI, Homeowners, and taxes are put into escrow, so with what I have in the bank and what i'll have with my 401k loan I wouldn't have an issue covering DP and closing costs.  My question is what are they looking for on top of that, if anything?

[JVille]

401K loans are perfectly acceptable to the lender. You need to tell your lender that is your source of Down Pmt and CC.

[ShanetheMortgageMan]

Not all loans need reserves, ask your loan officer if your loan approval required any.  The automated underwriting approval will indicate the amount of reserves it required to approve you, often it's $0.

Have you discussed taking out the 401k loan with your loan officer?  If not, do it immediately so they can properly approve your loan.  If you already have, then your loan officer should've informed you they would need:  a copy of the 401k statement, the 401k Summary Plan Description, a copy of the 401k check (or stub/letter that accompanies it) before you deposit it, a copy of your bank statement showing the funds deposited and in "available funds", and a new 401k statement showing the "vested amount" after the loan was taken out + activity since the previous statement.  JVille is correct that 401k funds are fine to use as the down payment, just make sure the loan officer is aware.