Using Retirement Funds ... 401K, IRA Accounts for Real Estate Purchases

Using Retirement Funds ... 401K, IRA Accounts

for Real Estate Purchases

There are several ways buyers can "fund" their home or investment property purchase beyond those funds they've built up via their savings accounts ...

As a potential home buyer, it's always important to discover and thoroughly investigate all options at your disposal.  Finding and working with a good loan officer makes a big difference in this regard.  

An experienced knowledgeable LO will do their homework and then present you with a menu of available options. Then they'll help you weigh the pros and cons of each as they pertain to you and your future plans.  

Now it's important to first point out:  "Low or NO Down Payment" mortgage programs exist.  And they certainly can help ease the need for large savings and down payments.

Some examples of those helpful mortgage programs are:

• VA Loans
• FHA Loans
• Home Ready Program (Fannie Mae)
• Home Possible/Home One Programs (Freddie Mac)
• USDA Loans
• IHDA * (100% Financing. Income Limits Apply. Funding is limited. Restrictions are also in place and apply. (* Illinois Housing Development Authority. Can be used for purchase of IL properties only.) 

And it's also important to add:  Beyond those mortgage programs mentioned above, help can be available to buyers/borrowers via the following methods.

• Down Payment Gifts
• Sellers Assistance
• Down Payment Assistance Programs
• IRA Withdrawals
• 401k Loans/Withdrawals
• More ...

But I'm going to focus in this post on 401k and IRA (Individual Retirement Accounts), where an account holder has "access" to their retirement funds before their retirements take place ...  

There are several ways that an employee with a 401K or IRA  can get to their funds if they're a hopeful buyer.  Those range from a loan against the balance of the account ... to an outright withdrawal of money.  

No matter the method of access, it's vitally important that each account holder/borrower know or learn the specifics of their own retirement plans/funds.  Each 401k or IRA plan can have different rules for loans and withdrawals.  I highly recommend, if you are considering either action, that you speak with your plan's administrator prior to moving forward.   

Of special note, if you're buying a first home:  In these instances, there are often specific provisions attached for that purpose.  Many plans allow an individual to withdraw funds without penalties for their home purchase.  It's wise to check with your administrator to see if that beneficial option exists for your first home purchase.

Also:  One's longevity with their employer may dictate if funds are available to be borrowed or withdrawn. 

If a provision of this nature exists, it's referred to as the "Vesting Period".  

It speaks to the number of years an employee is required to be in the company's retirement plan prior to being eligible to withdraw or obtain a loan on retirement funds.


Included in most (not all) cases:  An employee can typically borrow up to 50% of the TOTAL Balance of their account.  The funds can then be repaid* back into the same account via a payroll deduction made over a set period of time, usually 5 years.  *That "re-payment" of funds is NOT considered a monthly debt in most loan scenarios, note all the qualifiers for these actions.  

As you can tell from my paragraph above, there are many rules, regulations, and asterisks regarding 401K and IRA loans and withdrawals.  And again, they are why I so strongly urge all my borrowers to have a conversation with their plan's administrator prior to making any decision to tap their funds.  

All financial options should be presented, considered, and weighed by a borrower when hoping to buy.  But when retirement funds are being considered for use in a home purchase/financing, it's especially important that a careful review of account guidelines and rules be conducted and thoroughly understood.

For those considering the use of retirement funds for an investment property purchase, there may be special rules for them at play within their retirement plans.  Those I see most often are:

• Age of the Account Holder
• Rate of Returns
• Rules for accessing funds
• Special "terms" for gaining access (Loan or Withdrawal) to down payment funds by those purchasing an Investment Property

The use of retirement funds can be a very reliable and acceptable resource for funding a real estate purchase, for home or investment property.  But please ... protect yourself and your financial future.  

Take the time to fully-educate yourself prior to taking any action.  Consult your plan's administrator and your New Lenox - Will County - Chicagoland/IL - WI loan officer for information and advice along the way ...  

* Looking for financing answers, options, solutions, and experienced assistance? 

Are you hoping to Buy, Refinance or purchase an Investment Property in New Lenox, Will County, or elsewhere in the Chicagoland - IL - WI area?

Contact me!  I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
I'm easily found at:

Gene Mundt

Mortgage Originator -NMLS #216987 - IL Lic. 031.0006220 - WI Licensed

American Portfolio Mortgage Corp.

NMLS #175656

Direct: 815.524.2280

Cell/Text: 708.921.6331

eFax: 815.524.2281

www.genemundt.com

gmundt@goapmc.com

 

              

   

Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 

Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the 

greater Chicagoland region, including: 

The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 

Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 

Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, 

and elsewhere within IL & WI.

Referrals are Appreciated and Welcomed

  

Did You Receive a Mortgage Denial? Stay Calm and Take These Steps ...

Did You Receive a Mortgage Denial?

Stay Calm and Take These Steps ... 

Emotions play a big part in the home buying and financing processes.  In fact, an emotion (or two) may have provided most people the initial motivation to begin the process to buy in the first place ...

Emotions, such as curiosity, optimism, joy, excitement, pride, and even surprise drive people's desire to buy a home.  

Add to those the emotions someone may feel during mortgage pre-approval and application ... such as nervousness, fear, stress, and anticipation ... and it's easy to see why the processes of home buying and financing are likened to an emotional rollercoaster.

Typically, my posts focus on those actions borrowers can take to avoid or slow that emotional rollercoaster down.  My aim is always to guide them through those steps that will proactively position them and then assist them through their home's financing to a successful mortgage closing.

But what happens in those instances when we hit a roadblock?  When a denial for a mortgage is received?

First, it's important to know that, although dramatic and making for a compelling story, that outcome can typically be avoided through careful preparation, with time, and via the guidance of an experienced and knowledgeable mortgage originator.  

But in those instances where an actual mortgage application has been made and then denied ... what then?

Stay calm.  Don't panic ...

I've found that a denial returned at this point is typically not much of a surprise for those of my borrowers receiving it.    They know the details of those issues that might prove detrimental to receiving approval.   

Why?  I've held preparatory conversations outlining the strengths and weaknesses ... the pros and cons ... of their mortgage application with them.  They've been made fully aware of their odds for mortgage approval.

So typically at this point, it's a matter of our "re-grouping", so to speak.  And then finding another way of addressing those issues raised during their Underwriting Review.

What are those issues that result in mortgage denial most often?  Those contributing issues are:

• The Appraisal:  Value Concerns and Property Condition issues are the most commonly raised flags
• Something new (and adverse) has appeared since the Credit Report taken prior to Mortgage Closing.  (Example: A new credit application, such as those for a furniture or vehicle purchase or the appearance of a missed payment)  *Be Aware:  Lenders are required to reverify Credit and Employment within 10 (ten) days of Mortgage Closing.
• Employment changes*  See above re-verification info 
• Income changes  (Loss of income, reduction in hours, reduced overtime)
• Debt to Income ratios  (A result of "new/additional debt" or reduced income)
• Money in bank accounts have been moved or unaccounted cash deposits were made

It's important to know:  Receiving a mortgage denial in and of itself does NOT damage your credit score.  So do not fear that moving forward. 

But ... what comes next?

Continue to talk with your Mortgage Originator.  They will provide the details as to the findings of the Underwriter and your denial.  

Listen carefully and follow their instructions to address the issues raised.  Keep an open mind and consider/discuss all options available to you.

Many times issues and problems can be resolved easily and quickly and not derail your home buying transaction.   For those issues that demand more time and attention, it's vitally important to follow the advice of your mortgage originator.  

Focus razorlike on those issues contributing to the denial.  Roll up your sleeves and get back to work.  If credit damage was the culprit ... repair it.  Rebuild financial accounts, pay down debt, or rectify employment concerns.  

If an appraisal contributed to the denial received, consider all options available to you prior to moving forward.  Sometimes, appraisal concerns and issues can be negotiated items between Seller and Buyer, and thus resolved.  Remain in close communication with your agent and lender for advice resulting in the quickest and best results. 

As I said above, experiencing emotions throughout your home buying and financing process is only natural and to be expected.  The buying and financing of a home is a big step in someone's life.

Just don't let the emotions run away with you, blind you, slow you, or keep you from taking actions on your own behalf.  That advice is especially key when a denial for mortgage is received.

Stay calm.  Let the emotion of determination drive you forward.  

Confer with your mortgage originator.  Gather the facts that contributed to the denial, then take those actions that will reap you more positive results.  

* Looking for financing answers, options, solutions, and experienced assistance?

Are you hoping to Buy, Refinance or purchase an Investment Property in New Lenox, Will County, or elsewhere in the Chicagoland area?

Contact me!  I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
I'm easily found at:

Gene Mundt

Mortgage Originator -NMLS #216987 - IL Lic. 031.0006220 - WI Licensed

American Portfolio Mortgage Corp.

NMLS #175656

Direct: 815.524.2280

Cell/Text: 708.921.6331

eFax: 815.524.2281

www.genemundt.com

gmundt@goapmc.com

 

              

   

Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 

Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the 

greater Chicagoland region, including: 

The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 

Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 

Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, 

and elsewhere within IL & WI.

Referrals are Appreciated and Welcomed

  


















  



  

Credit Freeze: What You Need to Know (especially when Buying a Home)

Credit Freeze:  What You Need to Know

(especially when Buying a Home)

Currently, I'm working with clients that had chosen ... prior to their mortgage application ... to place a Credit Freeze on their credit file and credit accounts ...

They had decided to take that action after the discovery of 2017's major Equifax Credit Breach.  In that breach, hackers gained access to consumer's Social Security numbers, names, addresses, and birth dates.  

In a number of cases, these hackers also stole driver's license numbers, as well.  And in a much smaller number (but still sizeable), other varying identity info was also stolen during that breach.  

Pretty scary stuff when you consider the huge number of people that conduct personal banking and business online via their computer or cell phone.  Their decision (and many others) to place a Freeze at that time is pretty understandable.

But what security protections are actually found by consumers like my clients when they place a Credit Freeze on their credit file/credit accounts?  

First, it's important to know:

1. What a Credit Freeze is  
2. What it will and will not do regarding access to your personal financial and credit information 
3. How (and where) protections are put into place via Credit Freeze  
4. If it's ever prudent to remove a Credit Freeze, either permanently or temporarily

A Credit Freeze:

• Is a tool that restricts access to your Credit Report
• Is NOT the same as a Fraud Alert
• Does NOT affect your Credit Score
• Does NOT limit your ability to receive your Free Annual Credit Report
• Makes it harder for identity thieves to steal and use your personal information to open new credit accounts in your name.  

      Remember:  It's still vitally important that you continue to monitor your current existing accounts for irregularities, errors, and fraud.    

• Thanks to the Economic Growth, Regulatory Relief, and Consumer Protection Act, placement of a Credit Freeze no longer has a small fee associated with it.  Neither does the lifting/removal or "thawing" of a Credit Freeze.
• Must be placed at each of the 3 Major Credit Bureaus (Experian, TransUnion, Equifax.  Each Bureau requires that you set-up an account, perhaps requiring a PIN.)
• Does NOT apply to your current creditors.  They (and their designated agencies, such as debt collectors) remain able to access your credit info/report
• May not apply to other governmental agencies in instances such as subpoenas, warrants, etc.
• Does NOT protect you against everything, such as fraudulent activities perpetrated as a result of information gained through other means, i.e. stolen Social Security Numbers/Cards, etc.

If you decide to place a Credit Freeze, you must be prepared to provide all/some of the following info:

       *  Your Name
       *  Your Date of Birth
       *  Your Social Security Number
       *  Your Address
       *  Possibly other personal info

A Credit Freeze can be permanently removed from your credit file and credit accounts.  But it's also possible to remove a Credit Freeze temporarily or for specific inquiries or designated periods of time.  

My mortgage clients provide a good example of when it's necessary and wise to lift or remove (sometimes called "thawing") a Credit Freeze.

By temporarily lifting their Freeze, they made it possible for their mortgage process, including the running and examination of their credit and credit history, to proceed smoothly and in a timely manner.  


It's prudent to point out here that the Credit Freeze lift/removal must be in place at 2 points during the mortgage process.  First for initial credit run and inquiry for Approval and Application ... and then again just prior to Closing, as most lenders run a second credit check within 10 days of Closing.

In my clients' circumstance, that was the reason for our conversation together over the past weekend.  My call contained a reminder that the Credit Freeze lift/removal would need to be in place for their required upcoming Closing credit check.  It was something they were more than happy to hear and see to.

Other instances where a lift or removal of a Credit Freeze might be needed are:

• During a new employment application. Some employers conduct a credit check of applicants at this time.  (If your potential employer is performing a check, it might be helpful to find out which if the Credit Bureaus they utilize for this purpose.  Otherwise, you will need to lift the Freeze at all 3 Credit Bureaus)
• Application for service with a Utility Company
• Application for service with a Cell Phone Company
• Renting an apartment or home
• Application for new credit
• Application for a new credit card 

Remember the old saying, "Timing is Everything"?  It definitely applies when considering the lift or removal of a Credit Freeze.

Why?  A lift/removal can take as little as minutes ... or days.  So make sure you know and understand the time allotment needed to ensure a swift and favorable outcome for yourself.

This is also an opportune time to highlight 2 things of great importance.  It remains vitally important that you:

1. Not develop a sense of false security regarding your Credit Freeze
2. Make it your habit to check your Credit Report on a consistent basis.  (I recommend that you check your Credit Report for accuracy, at a minimum, once per year.)  

It's especially important to check your credit and monitor your accounts prior to applying for a mortgage loan.  I urge anyone hoping to buy or refinance a home to do so well before making application ... at least 6 months to a year.  Note:  Having a proactive credit/financing conversation with me at this time is also a very wise action. 

Placing a Credit Freeze on your credit file/credit accounts can be a helpful tool in the prevention of credit fraud.  But the pros and cons, as they affect you and your personal credit, must be weighed prior to taking action.

Should you have questions regarding any of the above ... or should you need answers or assistance with New Lenox - Chicagoland/IL - WI mortgage financing, please do not hesitate to reach out to me.  I'll be happy to assist ... 

* Looking for financing answers, options, solutions, and experienced assistance?

Are you hoping to Buy, Refinance or purchase an Investment Property in New Lenox, Will County, or elsewhere in the Chicagoland area?

Contact me!  I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
I'm easily found at:

Gene Mundt

Mortgage Originator -NMLS #216987 - IL Lic. 031.0006220 - WI Licensed

American Portfolio Mortgage Corp.

NMLS #175656

Direct: 815.524.2280

Cell/Text: 708.921.6331

eFax: 815.524.2281

www.genemundt.com

gmundt@goapmc.com

 

              

   

Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 

Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the 

greater Chicagoland region, including: 

The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 

Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 

Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, 

and elsewhere within IL & WI.

Referrals are Appreciated and Welcomed