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Documenting
Your Assets - Verifying Your Down Payment
401K
or Retirement Accounts
It is important to provide
documentation about your retirement accounts or 401K programs because
this is another asset you could draw upon as reserves in case of a
problem. It is also another way to show you have a savings history.
Just provide a copy of your most recent statement to your lender.
Many people use these accounts as a
source of funds for their down payment, too. Some employers allow you
to "cash out" a portion of the 401K and some allow you to
borrow against it. Be sure to keep copies of all paperwork involving
the transaction. If they cut you a check, be sure to make a photocopy
of that, too, including any receipt for deposit into your personal
bank account.
If you are borrowing against your 401K,
some lenders will count this as an additional debt to go along with
car payments, credit cards and other obligations. This may seem kind
of silly because you are borrowing your own money, but from the
lender's viewpoint it is still a monthly obligation that you must
come up with and should be taken into account. If you are
"tight" on your debt-to-income ratios in qualifying for a
home loan, this could be an important consideration. It may affect
whether you choose to cash out the account and pay any tax penalty, or
simply borrow against it.
copyright 2006 by Terry
Light and RealEstate ABC
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