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A. we all know we have to have reserve, so my question is this...IF a person uses their 401K as a reserve, can it have a loan against it? If it does have loan, can they require it to be paid off?
B. Will underwriters except gifts as a reserve as long as there is proof of where it came from?
I'm needing to use my reserve cash ( in bank) quickly and I want to use my 401K...
I short, they have taken so long that the reserve I was using has to be spent to pay a ballon payment...so I'm thinking on using my 401k
I'm not sure I understand exactly WHAT you are doing - but no, you will not be able to use 401k money as a reserve if you have a loan against it.
But from what I gather, it sounds like you are already in a financial pickle. It sounds like you are taking out a loan to pay back a different loan - which is nearly always a bad plan.
Btw, that loan you have on your 401k? Almost always, they become due in full if you separate from your employer. If you can't pay it back immediately, it becomes an early withdrawal with resultant tax penalties.
A. we all know we have to have reserve, so my question is this...IF a person uses their 401K as a reserve, can it have a loan against it? If it does have loan, can they require it to be paid off? No, no one can require you to payoff your 401K loan, but this is the calculation if it is to be used for reserves:
Current balance - loan balance = unencumbered amount x 60% = amount that can be used for reserves.
B. Will underwriters except gifts as a reserve as long as there is proof of where it came from?
Gifts can never be used for reserves. Use the gift for closing costs or down payment and keep your own money for reserves (semantics, I know). Another way you can use gift money is to have the donor pay your rent that is due or your car payment and you can bank that amount. In that case, documenting the gift may not even come into play and best of all, it's not breaking any rules.
I'm needing to use my reserve cash ( in bank) quickly and I want to use my 401K...
I short, they have taken so long that the reserve I was using has to be spent to pay a ballon payment...so I'm thinking on using my 401k. 401k's are fine for reserves, as long as you can document you have access in times of hardship. There is no need to take out a separate loan. Now if you have a loan against it already, see the calculation above.
Did you by any chance apply at a big box bank? They just turned away a golden, I mean GOLDEN buyer for a really stupid reason. (didn't have 2 years on job). I'm convinced they are all nuts.
Did you by any chance apply at a big box bank? They just turned away a golden, I mean GOLDEN buyer for a really stupid reason. (didn't have 2 years on job). I'm convinced they are all nuts.
It's going to be paid off in closing and it's 750.00 on 10k. I told them it could be payed off tomorrow if it needed to be, we shall see. Not borrowing to pay off that loan ( love how you assumed I'm in a pickle, not hardly.)
It's going to be paid off in closing and it's 750.00 on 10k. I told them it could be payed off tomorrow if it needed to be, we shall see. Not borrowing to pay off that loan ( love how you assumed I'm in a pickle, not hardly.)
Sorry for the (apparently) incorrect assumption, but go back and reread your OP. Loans against 401k's, Getting gifts for required reserves, and having to use all YOUR cash for a "balloon" payment sure does raise flags for me (without all the specific details, of course).
Sorry for the (apparently) incorrect assumption, but go back and reread your OP. Loans against 401k's, Getting gifts for required reserves, and having to use all YOUR cash for a "balloon" payment sure does raise flags for me (without all the specific details, of course).
Understood. Ballon payment is last payment on another home. This loan is to fix up my parents Home( rails and ramps and things of that sort) and other rental properties.. new flooring, paint, etc.
Underwriters taking so long, I need to move on the other stuff, so I'm paying off little loan on 401k so that won't be a question to use that.
Sorry for the (apparently) incorrect assumption, but go back and reread your OP. Loans against 401k's, Getting gifts for required reserves, and having to use all YOUR cash for a "balloon" payment sure does raise flags for me (without all the specific details, of course).
Understood. Ballon payment is last payment on another home. This loan is to fix up my parents Home( rails and ramps and things of that sort) and other rental properties.. new flooring, paint, etc.
Underwriters taking so long, I need to move on the other stuff, so I'm paying off little loan on 401k so that won't be a question to use that.
Cool. Now promise that you will never borrow against your 401K again! I can't hear you. . . Did you promise?
Cool. Now promise that you will never borrow against your 401K again! I can't hear you. . . Did you promise?
Yes, I promise. Might I add it wasn't for me that it was borrowed, my son is going to the University in my town, and needed it...I didn't have it at the time, I might add all this rental property ( a good bit of it) was given to me...so I'm learning at night about property and rental/tenant law and working by day, so I am trying... Maybe to fix it up enough and make it profitable.
Smartmoney, if your not on this forum to help others, then move on, everyone needs help and pointed in the right direction from time to time, it's ashame that apparently you think you're better than me(you are not, just to set you straight, wiseaz.)
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