What paperwork can a mortgage lender require you to have regarding your 401k?

Asked by Ponyboy1125@gmail.com, Fri Jul 19, 2013

I am currently trying to get preapproved for an FHA loan. My income is less than adequate currently so my father has agreed to cosign. When she gave us a list of the paperwork we were required to give to her before she submitted to an underwriter she told my father that she need statements from his 401k along with (it sounded like she said) the withdrawal terms/terms of withdrawal from the 401k. The way she explained it, it sounded like she needed directions on how to get money out of the 401k. I have been searching the internet and haven't seen anything about the requirements regarding your 401k. Also this seems like a reputable lending services company and both me and my father were a little turned off by this 401k talk. Any help would be appreciated.

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Sat Jul 20, 2013
You definitely need to reach out to your loan officer for clarification of the documentation you need to prove you or your father actually have these funds as reserves.

The FHA guidelines require a minimum of either the most recent two months' statements or the most recent quarterly statement of the account and only 60% of the balance will be calculated as reserves. Further, the instructions or terms for withdrawal can easily be obtained by contacting the 401k plan provider. Again, this is a standard practice and you shouldn't be alarmed.

If the holder of the account has borrowed from their 401k then they will need the details of that loan in order to factor the loan's repayment into the DTI for the mortgage purpose as this 401k loan is a contingent liability.
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