Re: Down Payment - The Latest Saga

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Posted by Matt on February 27, 1999 at 20:46:23:

In Reply to: Re: Down Payment posted by Terri on February 27, 1999 at 15:40:55:

Here's an update to my previous post and would like advice from anyone out there willing to help:
When my wife and I met with our "mortgage consultant" (I say that with a touch of sarcasm because there was not a whole lot of consulting or advice given!), she explained that because the money was a gift we would not qualify for their 5% down program but they would be more than happy to accept us into their 3% down program. The difference? They would accept a 3% down payment for our home but now we pay the closing costs. Plus, because our down payment is less, the infamous PMI is now greater, our monthly payments are greater and they end up getting more money in the long run. My question: Can I use funds from my 401K and IRA accounts as a first time home buyer to use as the down payment? I know that under the terms of my 401K I can withdraw all funds for a first time home, but with a 10% penalty. Can money be withdrawn from my IRA accounts also??? I know that the 401K and IRA funds qualify under the terms of "our own money." We have more than enough for a 5% down payment with the funds from these accounts together, but not one account on it's own. Any advice on this issue would be greatly appreciated.

Thanks,

Matt

: Be Careful with Gift Money!!! I just bought a home, here's my story:
: I was pre qualified with an out of state lender who quoted me a high interest rate. After finding a home I liked, I decided to go with my local Fleet Bank for my mortgage, they were able to offer a lower rate. At that time I realized that the first lender had underestimated my closing costs by several thousand dollars. My local bank person (not sure of her title), who took my application, advised me to get a "gift" for the difference. I asked what she needed. She told me to get a certified bank draft from the individual giving me the money and have them sign a "gift letter." According to her, that's all they needed. She was wrong.
: Months later, I'm wondering why my mortgage commitment hasn't come in. Turns out, the processor and underwriter, who are located in a different state, need to research the gifter's bank records. They need proof that the money I'm using came from this person's bank account. They need his bank statements and withdrawl slips, etc.. (Mind you, he's not the one buying the house, I am)
: Well, this person was not willing to have me or a strange bank research his financial history, so I had to save my own paychecks to cover the amount of what I was originally going to use the gift for. In a nutshell, the giver of the money needs to be willing to be investigated just as thoroughly as the buyer of the house, some people are not comfortable with that invasion of privacy.

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: Here's an update to my previous post and would like advice from anyone out there willing to help:
: When my wife and I met with our "mortgage consultant" (I say that with a touch of sarcasm because there was not a whole lot of consulting or advice given!), she explained that because the money was a gift we would not qualify for their 5% down program but they would be more than happy to accept us into their 3% down program. The difference? They would accept a 3% down payment for our home but now we pay the closing costs. Plus, because our down payment is less, the infamous PMI is now greater, our monthly payments are greater and they end up getting more money in the long run. My question: Can I use funds from my 401K and IRA accounts as a first time home buyer to use as the down payment? I know that under the terms of my 401K I can withdraw all funds for a first time home, but with a 10% penalty. Can money be withdrawn from my IRA accounts also??? I know that the 401K and IRA funds qualify under the terms of "our own money." We have more than enough for a 5% down payment with the funds from these accounts together, but not one account on it's own. Any advice on this issue would be greatly appreciated.

: Thanks,

: Matt

:
: : Be Careful with Gift Money!!! I just bought a home, here's my story:
: : I was pre qualified with an out of state lender who quoted me a high interest rate. After finding a home I liked, I decided to go with my local Fleet Bank for my mortgage, they were able to offer a lower rate. At that time I realized that the first lender had underestimated my closing costs by several thousand dollars. My local bank person (not sure of her title), who took my application, advised me to get a "gift" for the difference. I asked what she needed. She told me to get a certified bank draft from the individual giving me the money and have them sign a "gift letter." According to her, that's all they needed. She was wrong.
: : Months later, I'm wondering why my mortgage commitment hasn't come in. Turns out, the processor and underwriter, who are located in a different state, need to research the gifter's bank records. They need proof that the money I'm using came from this person's bank account. They need his bank statements and withdrawl slips, etc.. (Mind you, he's not the one buying the house, I am)
: : Well, this person was not willing to have me or a strange bank research his financial history, so I had to save my own paychecks to cover the amount of what I was originally going to use the gift for. In a nutshell, the giver of the money needs to be willing to be investigated just as thoroughly as the buyer of the house, some people are not comfortable with that invasion of privacy.

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