Home Buying in Warren>Question Details

marysimpler, Both Buyer and Seller in Warren, MI

Can I use a 401k loan for a down payment with an FHA loan?

Asked by marysimpler, Warren, MI Tue Apr 23, 2013

selling a property and should make $3,000 after selling fees. Want to buy a house listed at $189,000 through FHA. How much should I expect to have at closing and can I use my 401k to fund the down payment and closing costs? I have $13,000 in savings right now, but would like to keep my savings in the bank. My credit score is around 735.

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Yes you can borrow from your 401K with no penalty and payback yourself as this will not show on the credit report as a loan. Are you shopping for a Home? It may seem backwards to shop for a mortgage before you shop for the house, but there are several reasons for doing this. Shopping for a mortgage will also help if you can get “pre-approved” for the amount you’d like to borrow. This means the lender has looked over your credit and financial statement and agreed to lend you the money. Sellers like pre-approved buyers because there’s less risk the deal won’t go through. First, you’ll find out how much you can borrow, which has a lot to do with how much house you can buy.

Whether you’re, buying, building or Re-Financing your dream home, you have a lot riding on your decision. Market conditions and mortgage programs change frequently, and I welcome the opportunity to serve your needs with quick and accurate real estate financing advice. I have the expertise and knowledge to help you determine the absolute best loan program to meet your objectives. Get my top 25 Questions for FREE that you should be asking your lender before you choose them to secure a mortgage. If you are already working with a lender, don’t be shy to give me call so I can price the same mortgage for you with less cost. What do you have to loose but your money?

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Lowell Sterling
Mortgage Banker
NMLS# 968898
LSterling@englending.com
16800 N. Dallas Pkwy, Suite 290 | Dallas, TX 75248
Office: 972-646-2411 | Cell: 214-418-7022 | Fax: 214-614-4637
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1 vote Thank Flag Link Wed Apr 24, 2013
Mary,

First you need to check with your 401K plan to see if they would allow it. If yes, how much could you get & what are the repayment amount?
Second, would your mortgage company allow using those funds since you have to pay them back?
I would suspect that they may allow it for additional downpayment but not any closing costs.
You have a great credit score!!! Congratulations on that. Why wouldn't you want to use your savings? if you have an emergency down the road, you may be able to take money out of your 401K as a loan for that.
You need to speak with a mortgage rep as well as your 401K plan administrator.
I can gladly furnish you with some names if you like

I wish you the best!!
1 vote Thank Flag Link Tue Apr 23, 2013
Good Morning Mary,

I would recommend talking with your lender. They are the best to advise you on this. My son did exactly this when he bought his home but he was a first time homebuyer.

If you need assistance buying or selling a home I would be happy to help you.

Have a great day!!

Karen Paytas, GRI, CMS
Realtor
Real Living Kee Realty
586-709-8465
kpaytas@mirealsource.com
0 votes Thank Flag Link Tue Apr 23, 2013
If this is the first time personal residence, yes you can do that.

Talk to your company on this as they handle 401K through thrid party. Also to your mortgage person to ensure the procedure to be followed to handle=> mostly the funds has to directly to Ttle company from 401k provider.

Good luck
Ron
http://www.TheBestMIHomes.com
http://www.AffordableMIHomes.com
0 votes Thank Flag Link Tue Apr 23, 2013
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